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Chapter 1 - The World-wide Crisis

At the end of the year 1931 the International Labor Office of the League of Nations at Geneva reported 125 million workers in the Western nations unemployed. The depth of the depression that followed the panic of October, 1929 had not been reached at that time so it is safe to say, using those figures as a basis for estimate, that the number of unemployed reached the 150 million mark in the summer of 1933. In the United States alone, conservative figures place the number of unemployed at 12,000,000 and this figure is inadequate for the reason that it does not include the partially unemployed, the "temporary lay-offs" or those who do casual and seasonal labor, nor allow for the idleness in the agricultural and kindred industries. A fairer estimate, therefore, would be close to 18,000,000 unemployed at this time.

This progressive slump into the slough of idleness, poverty, pauperism and misery has been going on for four years. It is world-wide. It cannot be explained upon an assumption of local national causes. It extends from pole to pole and from London to the Ganges. Nor can it be dated from the beginning of the panic in 1929 or the World War. The same forces that produced the World War and its immolation of over 40 million lives in violent death or death from famine and pestilence, are the causes of this post-war desolation and social disintegration. The world is sick from a progressive economic paralysis whose symptoms have been perfectly apparent for fifty years.

As this condition of widespread international unemployment had been progressive in Europe and America since long before the World War, and its development in exaggerated form in the United States with the collapse of the stock market in October, 1929, was merely the climax of a series of progressive stages of world economic disorder, we must look for world causes rather than national causes as the reason for the general collapse of the economic structure. And, as the worldwide panic burst at the height of the period of greatest wealth production, with granaries and warehouses crammed with redundant goods, and banks overblowing with money and credit symbols, there can be no natural factor such as crop failure, flood or famine in the analysis. The direct opposite condition, one of peak production and natural superabundance prevailed. The fault must lie, therefore, in the system of production and distribution of wealth.

Two reasons popularly assigned for widespread starvation and pauperism in the midst of stupendous masses of stored wealth stand out. One is "overproduction" and the other is "over-development of the techniques of production." They both may be reduced to absurdity as far as they are to be considered fundamental causes. For it is silly to speak of overproduction of wheat when half the world is without ability to obtain sufficient bread. It is equally fatuous to speak of over-production of wool and cotton when the masses are growing ragged and haunting the second-hand clothing stations of the Salivation Army and the relief bureaus; or while the columns of our daily journals abound with appeals for charitable gifts of clothing and layettes for newborn infants. It is tragic irony to root out "over-productive" fruit orchards; to plow under every third row of cotton; or to restrict the planting of grain when millions of ill-clad and under-fed workers are haunting the garbage dumps and burrowing in the refuse cans for a scrap of food. And that condition is a fact of such common observation that it needs no data of reference. It is still more absurd to speak of an excess of building when the "For Rent" sign hangs on every fourth house in the residence suburb, while the evicted former tenants build shacks and shanties of packing boxes, burlap and tin cans on the fringes of all our cities, so that the name, "Shantytown" has come into common usage as descriptive of these new but unboasted real estate "additions."

The other factor of advanced technology is one that requires a more serious consideration, particularly since it has been so widely discussed under various names, "mechanization," "technocracy," "rationalization," "technological unemployment" and many others. Let us take a glance at it for a moment and see just what it is, for it isn't new, however novel the late terminology may seem, or however cleverly the mystic soothsayers of economic science may draw their graphs and describe their curves of statistical trends.

The Industrial Revolution

The Industrial Revolution is a fact. It is undisputed that machines have been displacing men in industry for over 200 years and at a constantly accelerating rate. From the decline of the feudal era in the fourteenth century, when men first began to produce things on an extensive scale for sale and exchange rather than, as in previous ages, to supply the needs and luxury tastes of their overlords, in other words, since the beginning of commodity-production, there has existed a growing profit motive for increased production. A commodity is a thing produced for sale or exchange rather than for use. This production of things for sale and exchange has been the impelling force that has stimulated human greed for wealth through trade and manufacture. The more goods produced, the more wealth for him who held possession of the output; therefore, the faster commodities could be produced and sold, the more rapidly could wealth be acquired.

The first advances in increased power and productivity of labor were slow. Water-power, horsepower and wind-power have their limitations. It was not until the introduction of the steam-engine as a practical means of applying power to production in 1781 that the real industrial revolution began. Like all inventions, the steam-engine was a social growth. It had existed in embryonic form for centuries. It had been used in crude form to pump water from the mines of Cornwall for generations before Watt and Bolton, in response to the universal demand for increased commodity-production and for some form of power to replace the human body and the water, wind and horse power applied to spinning and weaving, improved the crude steam-engine into a practical prime mover in industry.

The development of power from that day to this can be measured best in terms of mechanical force. The best engines of the eighteenth century produced 50 horsepower. The turbines of today produce 300,000 horsepower.

The impact of this new power upon society was tremendous, even in its crude beginnings. The puny human body that had been the embodiment of power and skill for 7,000 years was thrust aside like sods turned up by the ploughshare. The windmill and water-wheel, limited to favorable topographical areas, were quickly superseded. Old crafts and ancient ways of making a living became obsolete and Europe swarmed with hordes of displaced and starving working men and women. New machines to take the place of the hand-driven tools and adapted to, using the new power came into being with ever-increasing tempo. Great manufacturing cities such as Manchester, Leeds and Birmingham suddenly took on an access of rapid growth in wealth and population. And as economic wealth is power, the power and influence of the land-holding aristocracy gave way before that of a newly-enriched commercial aristocracy. To supply the factories with raw wool, peasants in hundreds of thousands were evicted and their small holding turned into sheep-walks. To provide the manufacturer with an unlimited supply of "free" slaves (that is, "free" to move about in search of a job) the feudal laws that bound men in service to the lord of the soil were tramped under foot or repealed and the evicted peasants were herded to the cities under pressure of starvation to compete with one another in the sale of their labor-power to the new lords of the factory and mill. By 1821, according to Seignobos' "Political History of Europe Since 1814," there were 2,500,000 out of a total population of 12,000,000 on poor relief in Great Britain. This "relative surplus population" had been produced by deliberate expropriation of the lands of the peasants and the appropriation of the industrial machinery and inventions by the legal piracy of the upstart manufacturing aristocracy of Great Britain. To control or dispose of this mass of "technologically unemployed" workers without violent revolution was the great political problem of England's ruling class for fifty years, just as the present mass of unemployed workers is the menacing problem of the ruling class of today.

In England "there remained in 1815," says Seignobos,

almost no independent peasants, small landed proprietors, or tenants on lease; all lands had finally been absorbed into great estates, belonging to lords or squires.

A similar concentration had taken place in manufacturing since the end of the eighteenth century. The industrial system had been revolutionized by two changes: 1st, the new machines driven by water or by steam, and the new mechanical arts, had created the factory system; 2nd, small employers who produced directly for a single business house, were replaced by capitalist employers who produced on a large scale for the general market and for exportation.

It is to be observed, in reading the above quotation from Seignobos, that England, whose present population is about 40,000,000, was suffering from a condition of "technological unemployment" and "surplus population" in 1821 when her population was around 12,000,000. There was no dearth of wealth in 1821; there is none today. England was the wealthiest because the most industrially advanced nation on earth in 1821; she is, next to the United states, the wealthiest nation in the world today. Of her total population, 2,500,000 or around 21 per cent were on poor relief in 1821. After a century of colonization and many and vast emigrations and the loss of 3,000,000 in the World War, 2,728,000 were on doles on Jan. 31, 1932 and these figures, like those of the United States do not adequately reflect the actual numbers of her unemployed which were much greater and have increased in the past year and a half. In 1821 the unemployment of her workers was attributed to the introduction of new machines, the excessive birthrate and the dispossession of her tenant farmers; today it is similarly attributed to rationalization, mechanization, "technological unemployment" and an excessive birthrate.

Two facts stand forth in this connection that are of prime importance; 1st, that poverty among the masses is not caused by pressure of population upon the means of subsistence or the tillable land area, for the same phenomena develop in the sparsely inhabited England of 1821 as in the densely populated England of 1933; 2nd, that inventions and consequent increase in the rate and mass of wealth produced through the greater efficiency of labor do not relieve or prevent growing poverty among the masses of the population. Wealth increases faster than population. In modern times, food and other means of subsistence have reversed the Malthusian law and have increased in a geometric ratio, that is as the series 2, 4, 8, 16, 32 etc., while population has increased in an arithmetical ratio; as 1, 2, 3, 4, 5 etc. So, instead of benefitting the working masses who produce all this increase of wealth, the opposite result follows and the workers grow relatively poorer and the rich richer.

The point of most importance in this connection is the fact that whatever the rate of technological advance, whether slow, as in the period of earlier capitalism, when water-power, wind-power, horsepower and the early steam-engine were the prime movers, as from 1735 to 1830; or with highly accelerated development as in the period from 1830 to 1900; or with the tremendous onward sweep of the machine processes that marked the period from 1900 to 1933; or, on the other hand, with the comparatively static condition of the 7,000 years that preceded the first of these periods, when practically no improvements in mechanical processes occurred, the results to the vast body of workers were the same. The ruling class owned and controlled the means of wealth production. The workers used them upon terms dictated by the owners. That condition was slavery, whether chattel slavery, in which the body of the toiler and skilled workman was owned outright by the patrician; or feudal serfdom, in which medieval lords owned the soil and dictated the terms of its use by feudal exactions; or modern wage-slavery, in which the capitalist master owns the machinery of production essential to life and controls the life of the worker by giving or withholding access to it upon terms dictated by himself and his class.

The evolution of society from each of these periods to its successor was marked by periods of temporary social and political disintegration and revolution and the irruption of a new ruling class previously suppressed and held to be inferior. And in each successive periodic revolution, the bases of privilege and power were broadened and made to include a more numerous class.

However important the tremendous incidence of machinery and new and improved technology may appear in the recent period, it is merely the form under which the fundamental cause of poverty and unemployment effects its results. The actual cause of the recurrent cycles of misery and poverty among the workers lies in the power of a class of parasitic nonworkers to shackle the inventive genius of the human race by claiming and exercising the right to own and control every accession of invention, every new fruit of human genius in the form of new machinery or new processes of production and to appropriate the beneficent results of social and scientific progress exclusively to themselves by owning and controlling every means by which such results may be applied.

Primacy of the Economic Factor in History

The industrial revolution that made power-driven machinery the prevailing method of wealth production began about 1735. We say "prevailing" method, for the reason that when a more efficient way of doing a thing comes into general use, the older and less efficient methods only gradually disappear. They still survive but only as vestigial remains of a dying culture. It is the elimination of waste energy by the more advanced methods that reduces the socially necessary labor and enables the nations developing them to grow more rapidly in population, wealth and power and, therefore, to "prevail" over peoples using more primitive methods. We speak of "socially necessary" labor as that labor which is applied to production in the most intelligent way; that is, which utilizes the most effective tools and methods to accomplish its purpose. A man who would plough with a crooked stick or an ox team hitched to a singlebottom plough would perform more manual labor to cultivate an acre than a man who used a modern tractor and a gang plough. But the extra labor would be no longer "socially" necessary because the modern tractor and gang plough is the tool that has socially survived and become adopted as the prevailing means of cultivation. Those who would persist in using the more primitive tools and methods, would be doomed to lag behind in the struggle for social survival and ultimately eliminated. It is only the socially necessary means of wealth production and the socially necessary labor power that determine the trends of civilization and the shifting of political power.

We have seen that the period of history that just followed the Napoleonic Wars and the French Revolution culminated about 1821-25 in a series of industrial crises similar to the present. Periodic panics have followed in cycles of from eight to twelve years as in 1837, 1848, 1857, 1873, 1,884, 1893, 1907, 1920 and 1929, with minor depressions or war in between. Panics and periods of depression had occurred at various times and in various nations in history before this series but only with the full development of capitalism in the nineteenth century did the industrial cycle become established as a characteristic of the capitalist system. The cause of these periods of economic reaction and depression were but vaguely defined in the earlier periods. They are thoroly understood today however much the scientific squid may try to becloud the clear waters of economic truth with sophistry and obscurantism. They constitute a fatal and inherent defect in the capitalist system which leads directly to inevitable revolutionary change. The development of machine and mass production is merely incidental to the general laws governing capitalism and not the primary cause of panics and depression. They would occur under a capitalist system of production and distribution of wealth however primitive the technique of manufacture might be. It is only important to point out that with each recurrence of the industrial cycle the periods of panic and depression become more intensified and world-wide in scope as the capitalist system obeying its inherent law of development becomes more integrated and centralized into a world embracing mechanism.

The present population of the earth is estimated at about 2 billions. It is probably three times as great as that of 1821. Yet the industrial revolution of 1775 to 1821, governed by the same inherent laws of capitalist development, produced a social and industrial crisis as great, relative to the population of the capitalist nations affected, as that resulting from technological and mechanical progress in the period from 1890 to 1929. The rate and relative per cent of displacement of men by machines within the capitalistically developed nations were probably not less. The breaking up of established habits, crafts, trades and social customs within those nations was probably as great, relative to their populations, as that taking place in the present revolutionary period. The relative amount of unemployment was probably equal.

The supremely important difference, however, is this: in the world of 1821 there were unsettled continents open for settlement and capitalist exploitation which furnished refuge for the displaced workers and room for expansion for the, then, new capitalist system. America, Australia and Africa furnished an outlet for the displaced human, and the civilized nations that yet lagged behind in production methods and technology provided constantly expanding fields of exploitation for capital. Today there is no such outlet. There are no new lands or continents. The modern machine has invaded them all. The whir of the wheels, belts and looms is heard from Bombay to Liverpool and the electric nerves have made one great social and economic organism of the earth from pole to pole, carrying power and culture in its modern form thruout the social universe. Only the primitive and obsolete method of class ownership and control remains to block the socialization of the human race.

In expanding, the industrial revolution, marked by the introduction of new inventions and machine precesses, has proceeded, not with uniform motion, but with constantly accelerated progress. The more machines the more rapid the rate of invention, for new inventions and ideas do not fall from heaven or come from inspiration, but evolve out of machines and processes in present use as the hands of the workers in contact with them suggest newer and more efficient methods and improvements to the workers brain. One new machine breeds many.

The power loom threw 800,000 hand-weavers onto the streets of London in the period of 1820-40. Those that survived starvation and the mortality that attends extreme poverty, joined with other displaced handicraftsmen and the evicted peasants and emigrated or were transported as "criminals" to America and the colonies, where they set to work reproducing the civilization and economic system from which they had just been expatriated.

But the displaced workers of today, numbering millions in all lands, cannot escape by emigration or by violating capitalist law and being transported to some penal settlement. For the machines that disinherited them now precede them to the foreign land. It is the machines that now emigrate and invade new territory faster than their human part—the workers. And the emigrant finds the same machines and the same unemployment facing him in all lands where capitalism is the prevailing method of wealth production. There is no escape from the conditions by emigration to a new country. The disease that afflicts society is constitutional and inherent in the capitalist system itself.

Nevertheless, it must be borne in mind that it is not the rate of mechanization or technological development that produces the poverty and unemployment. It is not the machines that produce the joblessness and misery. It is not overproduction of wheat that produced a bread famine among the poor. It is not overproduction of cotton and wool that makes men and women ragged and unclad. It is not excess of wealth produced that makes the producers penniless and unable to buy even a portion of their own product. Common sense and the most elementary social logic should enable even a capitalist economist to see that. It is the ownership and control of the land and machinery of production by a social class that lives without working, through the persistency of social laws and customs that have been outgrown by the economic structure of society, that is the cause of the present world-wide unemployment and social misery, even as it caused the more restricted crisis of a century ago. The world could bear it then because there was a way of escaping at least temporarily from it by emigrating and developing new and unaffected areas. It cannot escape by emigration today but must turn upon an obsolete system of class control as it has done in other ages and change it. The prevailing method of private capitalist ownership of the means of production and distribution is in increasing conflict with the biological necessities of the race and when that condition arises there always follow social upheaval and revolutionary change.

Next page: Chapter 2 - Surplus Value—the Source of Thieves' Loot