II.—Life, Liberty and the Pursuit of Happiness

"ALL men," wrote Thomas Jefferson in framing the Declaration of Independence, "have an inalienable right to life, liberty and the pursuit of happiness." The words are more than a felicitous phrase. They express even more than the creed of a nation. They embody in themselves the uppermost thought of the era that was dawning when they were written. They stand for the same view of society which, in that very year of 1776, Adam Smith put before the world in his immortal "Wealth of Nations" as the "System of Natural Liberty." In this system mankind placed its hopes for over half a century and under it the industrial civilization of the age of machinery rose to the plenitude of its power.

In the preceding chapter an examination has been made of the purely mechanical side of the era of machine production. It has been shown that the age of machinery has been in a certain sense one of triumph, of the triumphant conquest of nature, but in another sense one of perplexing failure. The new forces controlled by mankind have been powerless as yet to remove want and destitution, hard work and social discontent. In the midst of accumulated wealth social justice seems as far away as ever.

It remains now to discuss the intellectual development of the modern age of machinery and the way in which it has moulded the thoughts and the outlook of mankind.

Few men think for themselves. The thoughts of most of us are little more than imitations and adaptations of the ideas of stronger minds. The influence of environment conditions, if it does not control, the mind of man. So it comes about that every age or generation has its dominant and uppermost thoughts, its peculiar way of looking at things and its peculiar basis of opinion on which its collective action and its social regulations rest. All this is largely unconscious. The average citizen of three generations ago was probably not aware that he was an extreme individualist. The average citizen of to-day is not conscious of the fact that he has ceased to be one. The man of three generations ago had certain ideas which he held to be axiomatic, such as that his house was his castle, and that property was property and that what was his was his. But these were to him things so obvious that he could not conceive any reasonable person doubting them. So, too, with the man of to-day. He has come to believe in such things as old age pensions and national insurance. He submits to bachelor taxes and he pays for the education of other people's children; he speculates much on the limits of inheritance, and he even meditates profound alterations in the right of property in land. His house is no longer his castle. He has taken down its fences, and "boulevarded" its grounds till it merges into those of his neighbors. Indeed he probably does not live in a house at all, but in a mere "apartment" or subdivision of a house which he shares with a multiplicity of people. Nor does he any longer draw water from his own well or go to bed by the light of his own candle: for such services as these his life is so mixed up with "franchises" and "public utilities" and other things unheard of by his own great-grandfather, that it is hopelessly intertangled with that of his fellow citizens. In fine, there is little left but his own conscience into which he can withdraw.

Such a man is well aware that times have changed since his great-grandfather's day. But he is not aware of the profound extent to which his own opinions have been affected by the changing times. He is no longer an individualist. He has become by brute force of circumstances a sort of collectivist, puzzled only as to how much of a collectivist to be.

Individualism of the extreme type is, therefore, long since out of date. To attack it is merely to kick a dead dog. But the essential problem of to-day is to know how far we are to depart from its principles. There are those who tell us—and they number many millions—that we must abandon them entirely. Industrial society, they say, must be reorganized from top to bottom; private industry must cease. All must work for the state; only in a socialist commonwealth can social justice be found. There are others, of whom the present writer is one, who see in such a programme nothing but disaster: yet who consider that the individualist principle of "every man for himself" while it makes for national wealth and accumulated power, favors overmuch the few at the expense of the many, puts an over-great premium upon capacity, assigns too harsh a punishment for easy indolence, and, what is worse, exposes the individual human being too cruelly to the mere accidents of birth and fortune. Under such a system, in short, to those who have is given and from those who have not is taken away even that which they have. There are others again who still view individualism just as the vast majority of our great-grandfathers viewed it, as a system hard but just: as awarding to every man the fruit of his own labor and the punishment of his own idleness, and as visiting, in accordance with the stern but necessary ordination of our existence, the sins of the father upon the child.

The proper starting point, then, for all discussion of the social problem is the consideration of the individualist theory of industrial society. This grew up, as all the world knows, along with the era of machinery itself. It had its counterpart on the political side in the rise of representative democratic government. Machinery, industrial liberty, political democracy—these three things represent the basis of the progress of the nineteenth century.

The chief exposition of the system is found in the work of the classical economists—Adam Smith and his followers of half a century—who created the modern science of political economy. Beginning as controversialists anxious to overset a particular system of trade regulation, they ended by becoming the exponents of a new social order. Modified and amended as their system is in its practical application, it still largely conditions our outlook to-day. It is to this system that we must turn.

The general outline of the classical theory of political economy is so clear and so simple that it can be presented within the briefest compass. It began with certain postulates, or assumptions, to a great extent unconscious, of the conditions to which it applied. It assumed the existence of the state and of contract. It took for granted the existence of individual property, in consumption goods, in capital goods, and, with a certain hesitation, in land. The last assumption was not perhaps without misgivings: Adam Smith was disposed to look askance at landlords as men who gathered where they had not sown. John Stuart Mill, as is well known, was more and more inclined, with advancing reflection, to question the sanctity of landed property as the basis of social institutions. But for the most part property, contract and the coercive state were fundamental assumptions with the classicists.

With this there went, on the psychological side, the further assumption of a general selfishness or self-seeking as the principal motive of the individual in the economic sphere. Oddly enough this assumption—the most warrantable of the lot—was the earliest to fall under disrepute. The plain assertion that every man looks out for himself (or at best for himself and his immediate family) touches the tender conscience of humanity. It is an unpalatable truth. None the less it is the most nearly true of all the broad generalizations that can be attempted in regard to mankind.

The essential problem then of the classicists was to ask what would happen if an industrial community, possessed of the modern control over machinery and power, were allowed to follow the promptings of "enlightened selfishness" in an environment based upon free contract and the right of property in land and goods. The answer was of the most cheering description. The result would be a progressive amelioration of society, increasing in proportion to the completeness with which the fundamental principles involved were allowed to act, and tending ultimately towards something like a social millennium or perfection of human society. One easily recalls the almost reverent attitude of Adam Smith towards this system of industrial liberty which he exalted into a kind of natural theology: and the way in which Mill, a deist but not a Christian, was able to fit the whole apparatus of individual liberty into its place in an ordered universe. The world "runs of itself," said the economist. We have only to leave it alone. And the maxim of laissez faire became the last word of social wisdom.

The argument of the classicists ran thus. If there is everywhere complete economic freedom, then there will ensue in consequence a régime of social justice. If every man is allowed to buy and sell goods, labor and property, just as suits his own interest, then the prices and wages that result are either in the exact measure of social justice or, at least, are perpetually moving towards it. The price of any commodity at any moment is, it is true, a "market price," the resultant of the demand and the supply; but behind this operates continually the inexorable law of the cost of production. Sooner or later every price must represent the actual cost of producing the commodity concerned, or, at least, must oscillate now above and now below that point which it is always endeavoring to meet. For if temporary circumstances force the price well above the cost of producing the article in question, then the large profits to be made induce a greater and greater production. The increased volume of the supply thus produced inevitably forces down the price till it sinks to the point of cost. If circumstances (such, for example, as miscalculation and an over-great supply) depress the price below the point of cost, then the discouragement of further production presently shortens the supply and brings the price up again. Price is thus like an oscillating pendulum seeking its point of rest, or like the waves of the sea rising and falling about its level. By this same mechanism the quantity and direction of production, argued the economists, respond automatically to the needs of humanity, or, at least, to the "effective demand," which the classicist mistook for the same thing. Just as much wheat or bricks or diamonds would be produced as the world called for; to produce too much of any one thing was to violate a natural law; the falling price and the resulting temporary loss sternly rebuked the producer.

In the same way the technical form and mechanism of production were presumed to respond to an automatic stimulus. Inventions and improved processes met their own reward. Labor, so it was argued, was perpetually being saved by the constant introduction of new uses of machinery.

By a parity of reasoning, the shares received by all the participants and claimants in the general process of production were seen to be regulated in accordance with natural law. Interest on capital was treated merely as a particular case under the general theory of price. It was the purchase price needed to call forth the "saving" (a form, so to speak, of production) which brought the capital into the market. The "profits" of the employer represented the necessary price paid by society for his services, just enough and not more than enough to keep him and his fellows in operative activity, and always tending under the happy operation of competition to fall to the minimum consistent with social progress.