Art. 4.—THE PROBLEM OF MODERN INDUSTRY. 1. Industry and Trade, a Study of Industrial Technique and Business Organisation. By Alfred By Alfred Marshall. Macmillan, 1919. Final 2. Grundriss der allgemeinen Wirtschaftslehre. Posthumous Edition. Two vols. By Gustav Schmoller. Berlin: Duncker & Mumblot, 1919. 3. Self-Government in Industry (Bell. Second Edition, 1919); Guild Socialism Restated (Leonard Parsons, 1920), and other works. By G. D. H. Cole. 4. Plan for Democratic Control of Mining Industry. Published by South Wales Socialist Society, 1919. 5. Christianity and Industrial Problems. Being the report of the Archbishop's Fifth Commission of Inquiry. S.P.C.K., 1919. 6. Our Social Heritage. By Graham Wallas. Allen & Unwin, 1921. 7. The Acquisitive Society. By R. H. Tawney. Bell, 1921. 8. The Human Factor in Business. By B. Seebohm Rowntree. Longmans, 1921. 9. In Days to Come (Von Kommenden Dingen). By Walter Rathenau. Allen & Unwin, 1921. And other works. THE war, together with the tremendous economic upheaval which accompanied and followed it, marks the end of an epoch in the industrial history of Europe; and, though men's minds, in the modern age, generally move more slowly than outward events, it is clear that a new era of economic thinking is upon us also. Of the vast literature dealing with industrial reform or revolution which has accumulated during the last two or three generations, there is but little that has not been rendered out of date. Indeed, by a curious irony, it is the reformers and revolutionaries who are in greater danger of obsolescence than the classical and descriptive writers who formed the target of their attack; for the course of events which put Socialists into political power, for longer or shorter periods, in Russia, Germany, Austria and Hungary, at the very moment when the balance of economic power was being transferred, over the greater part of the continent, from the urban to the rural producer, has done less damage to the monumental analyses of Marshall and Schmoller than to the writings of those who, taking the familiar conditions of European economic life, and of Europe's relationship with the overseas world, for granted, employed their imagination, and raised imposing structures of theory, upon what has proved to be an unstable and shifting foundation. Recent periodical literature, in Germany in particular, abounds with descriptions of attempts to put Socialist theory into practice, and with reflexions on the lessons to be derived from the experience. A few passages may be given in illustration of the return to realism. "The hour of Socialism,' writes Prof. Schumpeter, himself sympathetically disposed to Socialist ideas, 'had certainly not yet struck when the world-war broke out. The course and sequel of the war on the economic field mark an ostensible approach to Socialism in one respect, in that they have somewhat accelerated the process of concentration or trustification. In all other essential respects the war has involved a setback to Socialism, as to every other social development, and assigned new tasks to capitalist private initiative, which would not have fallen to its share under normal conditions. We must learn to realise (he adds) that a merchant who can steer a load of coals past every obstacle in the way and deposit it safely in a factory is doing more service to his people than all the intellectuals put together.' The same periodical* contains an interesting and well-documented account by Prof. R. Michels of the Syndicalist occupation of the Italian metal factories in the autumn of 1920. The attempt which was to usher in a new economic order petered out after a few weeks owing to lack of capital and the withholding of raw materials and the cancellation of orders by 'capitalist salesmen and customers. An important contributing factor was the attitude of the engineers and technicians, who maintained 'neutrality' during the dispute and so gave a convincing demonstration of their indispensability. The Works Councils subsequently set up by Signor Giolitti were rather a concession to principle and a means of education than a change in the practical management or sovereignty of industry. Prof. Göppert† gives a careful survey of the Attempts * Archiv für Sozialwissenschaft und Sozialpolitik,' vol. 49. at Socialisation in Germany since the Revolution,' and arrives at a similar negative conclusion. He enumerates the four schools of economic thought which faced the situation in Germany after the debâcle at the close of the war-the orthodox Socialists, the advocates of controlled production (Planwirtschaft, a non-Socialist but largely self-governing Guild system), the pure entrepreneurs of the Stinnes type, and the Syndicalists or Bolshevists with their primitive watchword, 'The mine to the miners.' He points out how controlled production failed because 'it did not fit its theory to the facts but tried to make the facts fit its theory,' and ignored the depression and discouragement of initiative involved in the attempt to press the whole complex system of industry into a pre-arranged Procrustean scheme. Very similar is the conclusion of Prof. L. Mises, of Vienna, who is entitled to a hearing as having, almost alone among economists, rightly assessed the forces which were making for the break-up of the Hapsburg Monarchy. Having surveyed at close quarters the course of events which has made the economic life of his country largely dependent upon state action, albeit the action not of a domestic but of foreign governments, he concludes a careful analysis with the statement that Socialism is incompatible with a rational or satisfactory system of production. But, with characteristic irony, he adds that this is not necessarily an argument against Socialism. 'Neither those who believe in Socialism on ethical grounds, in spite of the fact that the socialisation of the means of production will diminish the available supply of necessary goods, nor those who are attracted to Socialism by an ideal of asceticism, will be influenced by such considerations. Still less will it deter those whose primary object in embracing Socialism is redemption from the most horrible of all barbarisms-the capitalist system."' 66 It is not the object of the following pages either to describe the changed economic situation with which the European peoples are now confronted or to adapt prewar projects and ideals to post-war realities. Their aim is at once more modest and more fundamental. It is to resurvey the ground left bare by the failure of what may broadly be described as NineteenthCentury Socialism and of the temper and philosophy Vol. 237.-No. 471. T of protest associated with it, and to indicate a fresh starting-point and a new direction, both for the conduct of business, and for men's reflexions and theories about it. Such a re-survey and re-analysis, which shall not only help men to look with fresh eyes at the economic process itself but also relate it to other elements in our civilisation from which it ought never to have been divorced, is perhaps the most urgent need of all those who spend their efforts and earn their livelihood in the task of production. For it is only through a vivid sense of what the actual nature of their service is, and of the need for co-operation and self-dedication in its performance, that they can hope to rise above the atmosphere of perplexity and of internecine conflict in which they have so long been enveloped. What is the economic process? What is the raison d'être of the vast accumulation of goods and warehouses, and means of transport and communication, which fills so large a space in our modern existence? It is to supply men's needs, men's political needs, the needs of man not as an individual in relation with the Infinite but as a social being. Politics and economics, or, to use the more precise traditional term, politics and political economy, are two closely related spheres of human life. Politics proper is concerned with the management of the common affairs of men, of the Res Publica, that which is common and of interest to men as members of a community. Political economy is concerned with one particular aspect of those common affairs, with the supplying of men's common needs, with the management of what it is still most helpful to think of, in the literal sense of the Greek word, as a household. As the first principle, the primary activity, of politics or government is to govern, to carry on the King's government, as the old English phrase runs, so the first principle of economics, or community-housekeeping, is to keep the household supplied with the goods and services indispensable to the maintenance of civilised existence. It is through the economic process, regular as the seasons, that the possibility of a 'good life' is maintained for dwellers in our highly organised 20th-century communities. These bald definitions have the savour of the common place. Yet, closely examined and thoroughly understood, they administer the coup de grâce to a whole tribe of theories, to generations of propaganda. Socialism, viewed as a movement of thought rather than of mere protest or revolt, has two guiding ideals-Justice and Freedom. 'The fruits of toil to the toiler,' and 'the emancipation of the proletariat,' the first a cry of Justice, the second of Freedom, are the two most resonant Socialist watchwords. To Freedom we shall be brought back later in our survey (p. 287). Here we must stop to note that Justice, in any exact meaning of the word, is ruled out by our definition. If the primary object of the economic process is to keep the household supplied with goods and services, then we cannot approve an economic scheme, however ethical in conception, which aims primarily at effecting goods among an equal, or approximately equal, distribution of the dwellers in the house rather than at maintaining a continuous supply. Supply, according to our definition, precedes and is the pre-requisite for distribution; and, if we are forced to choose between a lesser supply accompanied by a more equal distribution as against the maintenance of the existing supply, we shall be assuming a grave responsibility for the welfare of the household if we depart from our axiom and choose the former. Any school of economic thought, then, whether consciously ascetic, as in the case of Tolstoi, or simply doctrinaire, as in the case of less religiously minded advocates of Distributive Justice, which is prepared to make sweeping changes in distribution without due consideration for their effect on the flow of goods and services, is ignoring the most vital factor in its field of study and is liable to cruel disillusionment. The experience of the very able and sincere men who have ruined the economy of Russia in an attempt to follow this false light should be a sufficient warning. It is, however, perhaps too much to hope that we have seen the end of theories and movements taking their rise, not out of a clear vision of the real nature and purpose of economic activity, but out of a protest against particular classes, or even particular individuals, who have risen by means of it to controlling positions of wealth and power. The noble rage of Protestantism has precious place in the human scheme; but no its own |