In considering the ethics of the economic life and of property, so far as this latter topic has not received treatment elsewhere, we give (1) a general analysis of the ethical questions involved, (2) a more specific account of the problems raised by the present tendencies of industry, business, and property; we follow these analyses with (3) a statement of principles, and (4) a discussion of unsettled problems.

§ 1. GENERAL ANALYSIS

Both the economic process and property have three distinct ethical aspects corresponding respectively to the ethical standpoint of happiness, character, and social justice. (1) The economic process supplies men with goods for their bodily wants and with many of the necessary means for satisfying intellectual, Æsthetic, and social needs; property represents permanence and security in these same values. (2) Through the difficulties it presents, the work it involves, and the incitements it offers, the economic process has a powerful influence in evoking skill, foresight, and scientific control of nature, in forming character, and stimulating ambition to excel. Property means power, control, and the conditions for larger freedom. (3) The economic process has an important social function. Through division of labor, coÖperation, and exchange of goods and services, it affords one of the fundamental expressions of the organic nature of society in which members are reciprocally ends to each other. Property, likewise, is not only a possessing, but a "right," and thus, like all rights, involves the questions why and how far society should support the individual in his interests and claims. Let us examine each of these aspects further.

1. The Economic in Relation to Happiness.—Subject to the important qualifications to be made below under this and the succeeding sections, we note first that the supply of needs and wants by industry and commerce is ethically a good. A constant increase in production and consumption is at least a possible factor in a fuller life. Wealth is a possible condition of weal, even if it is not to be gratuitously identified with it. Rome is frequently cited as an example of the evil effects of material wealth. But it was not wealth per se, but wealth (a) gained by conquest, and exploitation, rather than by industry; (b) controlled by a minority; and (c) used in largesses or in crude spectacles—rather than democratically distributed and used to minister to higher wants. The present average income in the United States is about two hundred dollars a year per capita, too small a sum to permit comfortable living, sufficient education for children, and the satisfaction which even a very moderate taste may seek. From this point of view we may then ask of any industrial process or business method whether it is an economical and efficient method of production, and whether it naturally tends to stimulate increased production. To do this is—so far as it goes—ethically as well as economically desirable.

If wealth is a good, it might seem that property must be judged by the same standard, since it represents security in the satisfactions which wealth affords. But there is an important distinction. Wealth means enjoyment of goods and satisfaction of wants. Property means the title to the exclusive use or possession of goods. Hence the increase of property may involve increasing exclusion of part of the community from wealth, although the owners of the property may be increasing their own enjoyments. For, as pointed out very forcibly by Hadley in the first chapter of his Economics, the public wealth of a community is by no means equal to the sum of its private property. If all parks were divided up into private estates, all schoolhouses controlled by private owners, all water supplies and highways given into private control, the sum of private property might be very much increased; but the public wealth would be decreased. Property is one of the means of dealing with public wealth. It is important to bear in mind, however, that it is only one means. Wealth may be (1) privately owned and privately used; (2) privately owned and publicly or commonly used; (3) publicly owned, but privately used; (4) publicly owned and publicly or commonly used. Illustrations of these four methods are, for the first, among practically all peoples, clothing and tools; of the second, a private estate opened to public use—as a park; of the third, public lands or franchises leased to individuals; of the fourth, public highways, parks, navigable rivers, public libraries. Whether property in any given case is a means to happiness will depend, then, largely upon whether it operates chiefly to increase wealth or to diminish it. The view has not been infrequent that the wealth of the community is the sum of its private property. From this it is but a step to believe "that the acquisition of property is the production of wealth, and that he best serves the common good who, other things equal, diverts the larger share of the aggregate wealth to his own possession."[223] The ethical questions as to the relation of property to happiness involve accordingly the problem of justice and can be more conveniently considered under that head.

2. Relation to Character.—Even in its aspect of satisfying human wants, quantity of production is not the only consideration. As was pointed out in the chapters on Happiness, the satisfaction of any and every want is not necessarily a moral good. It depends upon the nature of the wants; and as the nature of the wants reflects the nature of the man who wants, the moral value of the economic process and of the wealth it provides must depend upon the relation of goods to persons. As economists we estimate values in terms of external goods or commodities; as ethical students we estimate values in terms of a certain quality of life. We must ask first how the satisfaction of wants affects the consumers.

Moral Cost of Production.—Consider next the producers. It is desirable to have cheap goods, but the price of goods or service is not measurable solely in terms of other commodities or service; the price of an article is also, as Thoreau has said, what it costs in terms of human life. There is cheap production which by this standard is dear. The introduction of machinery for spinning and weaving cotton cheapened cotton cloth, but the child labor which was supposedly necessary as a factor in cheap production, involving disease, physical stunting, ignorance, and frequently premature exhaustion or death, made the product too expensive to be tolerated. At least, it was at last recognized as too expensive in England; apparently the calculation has to be made over again in every community where a new system of child labor is introduced. What is true of child labor is true of many other forms of modern industry—the price in human life makes the product dear. The minute subdivision of certain parts of industry with the consequent monotony and mechanical quality of the labor, the accidents and diseases due to certain occupations, the devices to cheapen goods by ingredients which injure the health of the consumer, the employment of women under unsanitary conditions and for excessive hours with consequent risk to the health of themselves and their offspring—all these are part of the moral price of the present processes of industry and commerce.

Moreover, the relation of production to physical welfare is only one aspect of its effects upon life and character. We may properly ask of any process or system whether it quickens intelligence or deadens it, whether it necessitates the degradation of work to drudgery, and whether it promotes freedom or hampers it. To answer this last question we shall have to distinguish formal from real freedom. It might be that a system favorable to the utmost formal freedom—freedom of contract—would result in the most entire absence of that real freedom which implies real alternatives. If the only alternative is, this or starve, the real freedom is limited.

Property and Character.—Viewed on its positive side, property means an expansion of power and freedom. To seize, master, and possess is an instinct inbred by the biological process. It is necessary for life; it is a form of the Wille zum Leben or Wille zur Macht which need not be despised. But in organized society possession is no longer mere animal instinct; through expression in a social medium and by a social person it becomes a right of property. This is a far higher capacity; like all rights it involves the assertion of personality and of a rational claim upon fellow members of society for their recognition and backing. Fichte's doctrine, that property is essential to the effective exercise of freedom, is a strong statement of its moral importance to the individual.

Over against these positive values of property are certain evils which moralists have always recognized, evils both to the property owner and to society. Avarice, covetousness, hardness toward others, seem to be the natural effects of the enormous possibilities of power offered by property, joined with its exclusive character. The prophets of Israel denounced the rich, and Jesus's image of the difficulty found by the rich man in entering the kingdom of God—a moral society—has met general acceptance. Plato's portrayal of the State in which the wealthy rule sketches the perversion and disobedience of laws, the jealousies and class hatred, the evasion of taxes for public defense, and gives the moral outcome:—

Even apart from questions of just distribution, the moral question arises as to whether an unlimited power should be given to individuals in this form, and whether there should be unlimited right of inheritance. But all these tend to pass over at once into questions of justice.

3. Social Aspects.—The various relations of man to man, political, friendly, kindred, are developed forms of the interdependence implicit in the early group life. A group of units, each independent of the others, would represent mass only, but such a group as is made up of men, women, and children, sustaining all the relations found in present human life, represents something vastly more than a mass of individuals. Every life draws from the rest. Man without friendship, love, pity, sympathy, communication, coÖperation, justice, rights, or duties, would be deprived of nearly all that gives life its value.

The necessary help from others is obtained in various ways. Parental, filial, and other kinship ties, friendship and pity, give rise to certain services, but they are necessarily limited in their sphere and exact in return a special attitude that would be intolerable if made universal. The modern man does not want to be cousin to every one, to give every one his personal friendship, to be in a perpetual attitude of receiving favors, or of asking and not receiving. Formerly the way of getting service from men outside these means was by slavery. The economic relation provides for the mutual exchange of goods and services on a basis of self-respect and equality. Through its system of contracts it provides for future as well as present service. It enables each to obtain the services of all the rest, and in turn to contribute without incurring any other claims or relations. Nor does it at all diminish the moral value of these mutual exchanges of goods and services that they may be paid for. It used to be the theory that in every bargain one party gained and the other lost. It is now recognized that a normal transaction benefits both parties. The "cash payment basis," which was at first denounced as substituting a mechanical nexus for the old personal tie, is in reality a means for establishing a greater independence instead of the older personal relation of "master" and "servant." It enabled a man, as Toynbee puts it, to sell his labor like any other commodity without selling himself.

But while the economic process has these moral possibilities, the morality of any given system or practice will depend on how far these are actually realized.

First of all, we may fairly ask of a process, Does it give to each member the kind of service needed by him? In economic terms, Does it produce the kinds of goods which society needs and desires? A method which provides for this successfully will in so far be providing against scarcity of some goods and oversupply of others, and thus against one of the sources of crises, irregularity of work and wages, and ultimately against suffering and want.

Secondly, if the process is an expression of the mutual dependence and service of members who as persons all have, as Kant puts it, intrinsic worth, and who in our political society are recognized as equal, we may fairly ask how it distributes the results of services rendered. Does the process tend to a broad and general distribution of goods in return for services rendered, or to make "the rich richer and the poor poorer?" Or, from another point of view, we might ask, Does the process tend to reward members on a moral or equitable basis, or upon a basis which is non-moral if not immoral or unjust.

Thirdly, the problem of conflicting services presents itself under several forms. There is, first, the ever-present conflict between producer and consumer. Higher wages and shorter hours are good for the carpenter or the weaver, until he pays his rent or buys clothes, when he is interested in cheaper goods. What principle can be employed to adjust such a question? Again, service to the consumer may lead a producer to a price-list implying a minimum of profits. One producer can afford this because of his larger business, but it will drive his competitor from the field. Shall he agree to a higher price at which all can do business, or insist on the lower which benefits the consumer and also himself? The labor union is a constant embodiment of the problem of conflicting services. How far shall it serve a limited group, the union, at the expense of other workers in the same trade—non-unionists? Does it make a difference whether the union is open to all, or whether the dues are fixed so high as to limit the membership? Shall the apprentices be limited to keep up the wage by limiting the supply? If so, is this fair to the boys or unskilled laborers who would like to enter? And granting that it is a hardship to these, is it harder or is it kinder to them than it would be to leave the issue to the natural weeding out or starving-out procedure of natural selection in case too many enter the trade? Shall the hours be reduced and wages raised as high as possible, or is there a "fair" standard—fair to both consumer and laborer? How far may the union combine with the capitalist to raise prices to the consumer?

Private Property and Social Welfare.—The social value of property is obviously indirect, just as in law, private rights are regarded as indirectly based on social welfare. It is society's aim to promote the worth of its members and to favor the development of their personal dignity and freedom. Property may, therefore, claim social value in so far as it serves these ends, unless it interferes with other social values. The effect of private property has seemed to some disastrous to community of interest and feeling. Plato, for example, in his ideal state would permit his guardians no private property. There would, then, be no quarrels over "meum" and "tuum," no suits or divisions, no petty meanness or anxieties, no plundering of fellow-citizens, no flattery of rich by poor. The mediÆval church carried out his theory. Even modern society preserves a certain trace of its spirit. For the classes that Plato called guardians—soldiers, judges, clergy, teachers—have virtually no property, although they are given support by society. It would probably be generally agreed that it is better for the public that these classes should not have large possessions. But it is obvious that private property is not the sole cause of division between individuals and classes. Where there is a deep-going unity of purpose and feeling, as in the early Christian community, or in various other companies that have attempted to practice communism, common ownership of wealth may be morally valuable as well as practically possible. But without such unity, mere abolition of property is likely to mean more bitter divisions, because there is no available method for giving to each the independence which is necessary to avoid friction and promote happiness.

Granting, however, the general position that some parts of wealth should be privately owned, we must recognize that a great number of moral problems remain as to the precise conditions under which society will find it wise to entrust the control of wealth to private ownership. For it must be clearly kept in mind that there is no absolute right of private property. Every right, legal or moral, derives from the social whole, which in turn, if it is a moral whole, must respect the individuality of each of its members. On this basis moral problems, such as the following, must be considered. What kind of public wealth should be given into absolute control of private individuals or impersonal corporations? Does the institution in its present form promote the good of those who have no property as well as of those who have it, or only of those who own? Would the welfare of society as a whole be promoted by giving a larger portion of public wealth into private control, or by retaining a larger proportion than at present under public ownership? Should there be any limit to the amount of land or other property which an individual or corporation may own? Are there any cases in which private ownership operates rather to exclude the mass of society from the benefits of civilization than to give them a share of those benefits? Should a man be allowed to transmit all his property to his heirs, or should it be in part reserved by society?

The preceding analysis has aimed to state some of the problems which belong necessarily to the economic life. At the present time, however, the moral issues assume a new and puzzling aspect because of the changes in economic conditions. It will be necessary to consider briefly these changed conditions.

§ 2. THE PROBLEMS SET BY THE NEW ECONOMIC ORDER

The Collective and Impersonal Organizations.—Two changes have come over a large part of the economic and industrial field. The first is the change from an individual to a collective basis. The second, which is in part a consequence of the first, is a change from personal to impersonal or corporate relations. Corporations are of course composed of persons, but when organized for economic purposes they tend to become simply economic purpose incorporate, abstracted from all other human qualities. Although legally they may be subjects of rights and duties, they have but one motive, and are thus so abstract as to be morally impersonal. They tend to become machines for carrying on business, and, as such, may be as powerful—and as incapable of moral considerations—as other machines.

Ethical Readjustment.—Both these changes require readjustment of our ethical conceptions. Our conceptions of honesty and justice, of rights and duties, got their present shaping largely in an industrial and business order when mine and thine could be easily distinguished; when it was easy to tell how much a man produced; when the producer sold to his neighbors, and an employer had also the relations of neighbor to his workmen; when responsibility could be personally located, and conversely a man could control the business he owned or make individual contracts; when each man had his own means of lighting, heating, water supply, and frequently of transportation, giving no opportunity or necessity for public service corporations. Such conceptions are inadequate for the present order. The old honesty could assume that goods belonged to their makers, and then consider exchanges and contracts. The new honesty will first have to face a prior question, Who owns what is collectively produced, and are the present "rules of the game" distributing the returns honestly and fairly? The old justice in the economic field consisted chiefly in securing to each individual his rights in property or contracts. The new justice must consider how it can secure for each individual a standard of living, and such a share in the values of civilization as shall make possible a full moral life. The old virtue allowed a man to act more as an individual; the new virtue requires him to act in concerted effort if he is to achieve results. Individualist theories cannot interpret collectivist facts.

The changes in the economic and industrial processes by which not only the associated powers of present human knowledge, skill, and endurance, but also the combined results of past and future skill and industry are massed and wielded, depend on several concurrent factors. We shall notice the social agency, the technique of industry, the technique of business, the means of fixing value, and the nature of property.

§ 3. THE AGENCIES FOR CARRYING ON COMMERCE AND INDUSTRY

Early Agencies.—The early agencies for carrying on trade and industry were not organized purely for economic purposes. The kindred or family group engaged in certain industries, but this was only part of its purpose. So in the various territorial groups. The Athenian city-state owned the mines; the German village had its forest, meadow, and water as a common possession; and the "common" survived long in English and American custom, though the cattle pastured on it might be individually owned. In the United States certain land was reserved for school purposes, and if retained would now in some cases be yielding an almost incredible amount for public use; but it has usually been sold to private individuals. The national government still retains certain land for forest reserve, but until the recent movement toward municipal ownership, the civic community had almost ceased to be an economic factor in England and America, except in the field of roads, canals, and the postoffice. In both family and territorial or community control of industry, we have the economic function exercised as only one among several others. The economic helped to strengthen the other bonds of unity. On the other hand, the economic motive could not disentangle itself and stand out in all its naked force. Within either family or civic group the effects of the acquisitive instincts were limited by the fact that individuals in their industrial relations were also kin or neighbors.

The Business Enterprise.—In the business enterprise—partnership, company, corporation, "trust,"—on the other hand, men are organized solely for economic purposes. No other interests or ends are regarded. Corporations organized for this purpose "have no souls," because they consist of merely the abstract economic interests. While in domestic and territorial agencies the acquisitive forces were to some degree beneficially controlled, they were also injuriously hampered. With the rise of business enterprise as a distinct sphere of human action, the way was opened for a new force to manifest itself. This brought with it both advantages and disadvantages for the moral and social life as a whole. On the one hand, it increased tremendously the possibilities of economic and industrial efficiency. The size of the enterprise could be as large or as small as was needed for the most efficient production, and was not, as in family or community agency, sometimes too small and sometimes too large. The enterprise could group men according to their capacity for a particular task, and not, as in the other forms, be compelled to take a group already constituted by other than economic or industrial causes. Further, it could without difficulty dispense with the aged or those otherwise unsuited to its purposes. When, moreover, as is coming to be increasingly the case, great corporations, each controlling scores or even hundreds of millions of capital, are linked together in common control, we have a tremendous force which may be wielded as a unit. It is easy to assume—indeed it is difficult for managers not to assume—that the interests of such colossal organizations are of supreme importance, and that diplomacy, tariffs, legislation, and courts should be subordinate. The moral dangers attaching to such corporations formed solely for economic purposes are obvious, and have found frequent illustration in their actual workings. Knowing few or none of the restraints which control an individual, the corporation has treated competitors, employees, and the public in a purely economic fashion. This insures certain limited species of honesty, but does not include motives of private sympathy or public duty.

The Labor Union.—Correlative to these corporate combinations of capital are Labor Unions of various types. They are usually when first organized more complex in motive, including social and educational ends, and are more emotional, or even passionate in conduct. With age they tend to become more purely economic. In the United States they have sought to secure better wages, to provide benefits or insurance in case of sickness and death, and to gain better conditions in respect of hours, of child-labor, and of protection against dangerous machinery, explosions, and occupational diseases. In Great Britain they have also been successful in applying the coÖperative plan to the purchase of goods for consumption. The organizations have been most successful among the skilled trades. For so far as the aim is collective bargaining, it is evident that the union will be effective in proportion as it controls the whole supply of labor in the given trade. In the unskilled forms of labor, especially with a constant flow of immigration, it is difficult, if not impossible, to maintain organizations comparable with the organizations of capital. Hence in conflicts it is natural to expect the moral situations which frequently occur when grossly unequal combatants are opposed. The stronger has contempt for the weaker and refuses to "recognize" his existence. The weaker, rendered desperate by the hopelessness of his case when he contends under rules and with weapons prescribed by the stronger, refuses to abide by the rules and resorts to violence—only to find that by this he has set himself in opposition to all the forces of organized society.

Group Morality Again.—The striking feature of the new conditions is that it means a reversion to group morality. That is, it has meant this so far. Society is struggling to reassert a general moral standard, but it has not yet found a standard, and has wavered between a rigid insistence upon outgrown laws on the one hand, and a more or less emotional and unreasoned sympathy with new demands, upon the other.[225] Group morality meant impersonal, collective life. It meant loyalty to one's own group, little regard for others, lack of responsibility, and lack of a completely social standard. There is, of course, one important difference. The present collective, impersonal agencies are not so naÏve as the old kinship group. They can be used as effective agencies to secure definite ends, while the manipulators secure all the advantages of the old solidarity and irresponsibility.

Members and Management.—The corporation in its idea is democratic. For it provides for the union of a number of owners, some of them it may be small owners, under an elected management. It would seem to be an admirable device for maintaining concentration of power with distribution of ownership. But the very size of modern enterprises and unions prevents direct control by stockholders or members. They may dislike a given policy, but they are individually helpless. If they attempt to control, it is almost impossible, except in an extraordinary crisis, to unite a majority for common action.[226] The directors can carry on a policy and at the same time claim to be only agents of the stockholders, and therefore not ultimately responsible. What influence can the small shareholders in a railway company, or a great industrial corporation, or labor union, have? They unite with ease upon one point only: they want dividends or results. When an illegal policy is to be pursued, or a legislature or jury is to be bribed, or a non-union man is to be "dealt with," the head officials likewise seek only "results." They turn over the responsibility to the operating or "legal" department, or to the "educational committee," and know nothing further. These departments are "agents" for the stockholders or union, and therefore, feel quite at ease. The stockholders are sure they never authorized anything wrong. Some corporations are managed for the interest of a large number of owners; some, on the other hand, by ingenious contracts with side corporations formed from an inner circle, are managed for the benefit of this inner circle. The tendency, moreover, in the great corporations is toward a situation in which boards of directors of the great railroad, banking, insurance, and industrial concerns are made up of the same limited group of men. This aggregate property may then be wielded as absolutely as though owned by these individuals. If it is used to carry a political election the directors, according to New York courts, are not culpable.

Employer and Employed.—The same impersonal relation often prevails between employer and employed. The ultimate employer is the stockholder, but he delegates power to the director, and he to the president, and he to the foreman. Each is expected to get results. The employed may complain about conditions to the president, and be told that he cannot interfere with the foreman, and to the foreman and be told that such is the policy of the company. The union may serve as a similar buffer. Often any individual of the series would act humanely or generously, if he were acting for himself. He cannot be humane or generous with the property of others, and hence there is no humanity or generosity in the whole system. This system seems to have reached its extreme in the creation of corporations for the express purpose of relieving employers of any personal responsibility. Companies organized to insure employers against claims made by employees on account of injuries may be regarded as a device for distributing the burden. But as the company is organized, not primarily to pay damages, as are life insurance companies, but to avoid such payment, it has a powerful motive in contesting every claim, however just, and in making it so expensive to prosecute a claim that the victims may prefer not to make the attempt. The "law's delay" can nearly always be counted upon as a powerful defense when a poor man is plaintiff and a rich corporation is defendant.

Relations to the Public.—The relations of corporations to the public, and of the public to corporations, are similarly impersonal and non-moral. A convenient way of approach to this situation is offered by the ethical, or rather non-ethical, status of the various mechanical devices which have come into use in recent years for performing many economic services. The weighing machines, candy machines, telephones, are supposed to give a certain service for a penny or a nickel. But if the machine is out of order, the victim has no recourse. His own attitude is correspondingly mechanical. He regards himself as dealing, not with a person, but with a thing. If he can exploit it or "beat" it, so much the better. Now a corporation, in the attitude which it takes and evokes, is about half-way between the pure mechanism of a machine and the completely personal attitude of a moral individual. A man is overcharged, or has some other difficulty with an official of a railroad company. It is as hopeless to look for immediate relief as it is in the case of a slot machine. The conductor is just as much limited by his orders as the machine by its mechanism. The man may later correspond with some higher official, and if patience and life both persist long enough, he will probably recover. But to prevent fraud, the company is obliged to be more rigorous than a person would be who was dealing with the case in a personal fashion. Hence the individual with a just grievance is likely to entertain toward the corporation the feeling that he is dealing with a machine, not with an ethical being, even as the company's servants are not permitted to exercise any moral consideration in dealing with the public. They merely obey orders. Public sentiment, which would hold an individual teamster responsible for running over a child, or an individual stage owner responsible for reckless or careless conduct in carrying his passengers, feels only a blind rage in the case of a railroad accident. It cannot fix moral responsibility definitely upon either stockholder or management or employee, and conversely neither stockholder, nor manager, nor employee[227] feels the moral restraint which the individual would feel. He is not wholly responsible, and his share in the collective responsibility is so small as often to seem entirely negligible.

Relations to the Law.—The collective business enterprises, when incorporated, are regarded as "juristic persons," and so gain the support of law as well as become subject to its control. If the great corporation can thus gain the right of an individual, it can enter the field of free contract with great advantage. Labor unions have not incorporated, fearing, perhaps, to give the law control over their funds. They seek a higher standard of living, but private law does not recognize this as a right. It merely protects contracts, but leaves it to the individual to make the best contract he can. As most wage-earners have no contracts, but are liable to dismissal at any time, the unions have seen little to be gained by incorporation. They have thus missed contact with the institution in which society seeks to embody, however tardily, its moral ideas and have been, in a sense, outlaws. They were such at first by no fault of their own, for the law treated such combinations as conspiracies. And they are still at two decided disadvantages. First, the capitalistic or employing corporation acting as a single juristic person may refuse to buy the labor of a union; indeed, according to a recent decision, it cannot be forbidden to discharge its employees because of their membership in a union. As the corporation may employ scores of thousands, and be practically the only employer of a particular kind of labor, it can thus enforce a virtual boycott and prevent the union from selling its labor. It does not need to use a "blacklist" because the employers are all combined in one "person." On the other hand, the union is adjudged to act in restraint of interstate commerce if it boycotts the employing corporation. The union is here treated as a combination, not as a single person. The second point in which the employing body has greatly the legal advantage appears in the case of a strike. Men are allowed to quit work, but this is not an effective method of exerting pressure unless the employer is anxious to keep his plant in operation and can employ no one else. If he can take advantage of an open labor market and hire other workmen, the only resource of the strikers is to induce these to join their ranks. But they have been enjoined by the courts, not only from intimidating, but even from persuading[228] employees to quit work. The method of procedure in enforcing the injunction, which enables the judge to fix the offense, eliminate trial by jury, determine the guilt, and impose any penalty he deems fit, has all the results of criminal process with none of its limitations, and forms a most effective agency against the unions. Where persuasion is enjoined it is difficult to see how a union can exert any effective pressure except in a highly skilled trade, where it can control all the labor supply. In the field of private rights and free contract, the labor unions are then at a disadvantage because they have no rights which are of any value for their purposes, except, under certain conditions, the right to refuse to work. And since this is, in most cases, a weapon that injures its wielder far more than his opponent, it is not effective.

Disappointed in the field of free contract, the labor unions seek to enlist public agency in behalf of better sanitary conditions and in prevention of child-labor, long hours for women, unfair contracts, and the like. Capitalistic corporations frequently resist this change of venue on the ground that it interferes with free contract or takes away property without "due process of law," and many laws have been set aside as unconstitutional on these grounds,[229] several of them no doubt because so drawn as to appear to be in the interest of a class, rather than in that of the public. The trend in the direction of asserting larger public control both under the police power and over corporations in whose service the public has a direct interest, will be noted later. Against other corporations the general public or the unsuccessful competitor has sought legal aid in legislation against "trusts," but this has mainly proved to be futile. It has merely induced a change in form of organization. Nor has it been easy as yet for the law to exercise any effective control over the business corporation on any of the three principles invoked—namely: to prevent monopoly, to secure the public interest in the case of public service corporations, and to assert police power. For penalties by fine frequently fail to reach the guilty persons, and it is difficult to fix any personal responsibility. Juries are unwilling to convict subordinate officials of acts which they believe to have been required by the policy of the higher officials, while, on the other hand, the higher officials are seldom directly cognizant of criminal acts. Gradually, however, we may believe that the law will find a way to make both capital and labor organizations respect the public welfare, and to give them support in their desirable ends. The coÖperative principle cannot be outlawed; it must be more fully socialized.

§ 4. THE METHODS OF PRODUCTION, EXCHANGE, AND VALUATION

The Machine.—The technique of production has shown a similar progress from individual to collective method. The earlier method was that of handicraft. The present method in most occupations, aside from agriculture, is that of the machine. But the great economic advantage of the machine is not only in the substitution of mechanical power for muscle; it is also in the substitution of collective for individual work. It is the machine which makes possible on a tremendously effective basis the division of labor and its social organization. The extraordinary increase in wealth during the past century depends upon these two factors. The machine itself moreover, in its enormous expansion, is not only a social tool, but a social product. The invention and discovery which gave rise to the new processes in industry of every sort were largely the outcome of scientific researches carried on at public expense to a great extent by men other than those who finally utilize their results. They become in turn the instruments for the production of wealth, which is thus doubly social in origin.

This machine process has an important bearing upon the factors of character mentioned in our analysis. It standardizes efficiency; it calls for extraordinary increase of speed; it requires great specialization of function and often calls for no knowledge of the whole process. On the other hand, it gives a certain sense of power to control and direct highly complicated machinery. In the more skilled trades there is more time and resource for intellectual, Æsthetic, or social satisfactions. The association of workmen favors discussion of common interests, sympathy, and coÖperation; this may evoke a readiness to sacrifice individual to group welfare, which is quite analogous to patriotic sentiment at its best, even if it is liable to such violent expressions as characterize patriotic sentiment at its worst. The association of workmen is one of the most significant features of modern industry.

Capital and Credit.—The technique of exchange of services and goods has undergone a transformation from an individual and limited to a collective and almost unlimited method. The earlier form of exchange and barter limited the conduct of business to a small area, and the simpler form of personal service involved either slavery or some personal control which was almost as direct. With the use of money it became possible to make available a far greater area for exchange and to accumulate capital which represented the past labors of vast numbers of individuals. With the further discovery of the possibilities of a credit system which business enterprise now employs, it is possible to utilize in any enterprise not merely the results of the labor of the past, but the anticipated income of the future. A corporation, as organized at present, issues obligations in the form of bonds and stock which represent no value as yet produced, but only the values of labor or privilege anticipated. The whole technique, therefore, of capital and credit means a collective business enterprise. It masses the work and the abilities of thousands and hundreds of thousands in the past and the future, and wields the product as an almost irresistible agency to achieve new enterprises or to drive from the field rival enterprises.

Basis of Valuation.—The whole basis for value and prices has also been changed. The old basis, employed for the most part through the Middle Ages in fixing the value of labor or goods, was the amount of labor and material which had been expended. The modern basis is that of supply and demand. This proceeds on the theory that it is human wants which after all give value to any product. I may have expended time and labor upon a book or carving, or in the cultivation of a new vegetable, or in the manufacture of an article for apparel, but if no one cares to read the book or look at the carving, if the vegetable is one that no one can eat, or the garment is one that no one will wear, it has no value. Starting then from this, we can see how the two elements in valuation—namely, demand and supply—are affected by social factors. The demand for an article depends upon the market: i.e., upon how many buyers there are, and what wants they have. Modern methods of communication and transportation have made the market for goods as large as the civilized world. Education is constantly awakening new wants. The facilities for communication, for travel, and for education are constantly leading one part of the world to imitate the standards or fashions set by other parts. We have, therefore, a social standard for valuation which is constantly extending in area and in intensity.

The other factor in valuation, namely, the supply, is likewise being affected in an increasing degree by social forces. With many, if not with most, of the commodities which are of greatest importance, it has been found that there is less profit in an unrestricted supply than in a supply regulated in the interest of the producers. The great coal mines, the iron industries, the manufacturers of clothing, find it more profitable to combine and produce a limited amount. The great corporations and trusts have usually signalized their acquisition of a monopoly or an approximate control of any great field of production by shutting down part of the factories formerly engaged. The supply of labor is likewise limited by the policies of labor unions in limiting the number of apprentices allowed, or by other means of keeping the union small. Tariffs, whether in the interest of capital or of labor, are a social control of the supply. Franchises, whether of steam railroads, street transportation, gas, electric lighting, or other public utilities so-called, are all of them in the nature of monopolies granted to a certain group of individuals. Their value is dependent upon the general need of these utilities, coupled with the public limitation of supply. In many cases the services are so indispensable to the community that the servant does not need to give special care or thought to the rendering of especially efficient service. The increase in population makes the franchises enormously profitable without any corresponding increase of risk or effort on the part of the utility company.

But the most striking illustration of the creation of values by society is seen in the case of land. That an acre of land in one part of the country is worth fifty dollars, and in another part two hundred thousand dollars,[230] is not due to any difference in the soil, nor for the most part to any labor or skill or other quality of the owner. It is due to the fact that in the one case there is no social demand, whereas, in the other, the land is in the heart of a city. In certain cases, no doubt, the owner of city real estate may help by his enterprise to build up the city, but even if so this is incidental. The absentee owner profits as much by the growth of the city as the foremost contributor to that growth. The owner need not even improve the property by a building. This enormous increase in land values has been called the "unearned increment." In America it is due very largely to features of natural location and transportation. It has seemed to some writers, such as Henry George, not only a conspicuous injustice, but the root of all economic evil. It is, no doubt, in many cases, a conspicuous form of "easy money," but the principle is not different from that which is involved in nearly all departments of modern industry. The wealth of modern society is really a gigantic pool. No individual knows how much he creates; it is a social product. To estimate what any one should receive by an attempted estimate of what he has individually contributed is absolutely impossible.

§ 5. THE FACTORS WHICH AID ETHICAL RECONSTRUCTION

The two distinctive features of the modern economic situation, its collective character and its impersonal character, are themselves capable of supplying valuable aid toward understanding the ethical problems and in making the reconstruction required. For the very magnitude of modern operations and properties serves to bring out more clearly the principles involved. The impersonal character allows economic forces pure and simple to be seen in their moral bearings. Publicity becomes a necessity. Just as the factories are compelled to have better light, air, and sanitation than the sweat shops, so public attention is aroused and the conscience stimulated by practices of great corporations, although these practices may be in principle precisely the same as those of private persons which escape moral reprobation. In some cases, no doubt, the very magnitude of the operation does actually change the principle. A "lift" on the road from an oldtime stage-driver, or a "special bargain" at a country store was not likely to disturb the balance of competition as a system of free passes or secret rebates may in modern business. But in other cases what the modern organizations have done is simply to exhibit the workings of competition or other economic forces on a larger scale. An illustration of this is seen in the familiar fact that a law passed to correct some corporate practice is often found to apply to many practices not contemplated by the makers of the law.

The effect of getting a principle out into the open and at work on a large scale is to make public judgment clear and reprobation of bad practices more effective. The impersonal factor likewise contributes powerfully to make condemnation easy. Criticism is unhampered by the considerations which complicate the situation when the conduct of an individual is in question. The individual may be a good neighbor, or a good fellow, or have had bad luck. But no one hesitates to express his opinion of a corporation, and the average jury is not biased in its favor, whatever may be true of the bench. Even the plea that the corporation includes widows and orphans among its shareholders, which is occasionally put forth to avert interference with corporate practices, usually falls on unsympathetic ears. A higher standard will be demanded for business conduct, a more rigid regard for public service will be exacted, a more moderate return for invested capital in public service, and a more liberal treatment of employees will be insisted upon from corporations than from private individuals. Nor does the organization of labor escape the same law. When an agent of a union has been detected in calling a strike for private gain, public sentiment has been as severe in condemnation as in the case of corporate officials who have profited at the expense of stockholders.

Summary.—We may summarize some of the chief points brought out by our analysis. Modern technique has increased enormously the productivity of labor, but has increased its dangers to health and life, and to some extent diminished its educating and moralizing values. The impersonal agencies give vast power, but make responsibility difficult to locate. The collective agencies and the social contributions make the economic process a great social pool. Men put in manual labor, skill, capital. Some of it they have inherited from their kin; some they have inherited from the inventors and scientists who have devised tools and processes; some they have wrought themselves. This pooling of effort is possible because of good government and institutions which were created by statesmen, patriots, and reformers, and are maintained by similar agencies. The pool is immensely productive. But no one can say just how much his contribution earns. Shall every one keep what he can get? Shall all share alike? Or shall there be other rules for division—either made and enforced by society or made by the individual and enforced by his own conscience? Are our present rules adequate to such a situation as that of the present? These are some of the difficult questions that modern conditions are pressing upon the man who thinks.

Besides the classic treatises of Adam Smith, J. S. Mill, and Karl Marx, which are important for the relation of the economic to the whole social order during the past century, the following recent works in the general field give especial prominence to the ethical problems involved: Marshall, Principles of Economics, 1898; Hadley, Economics, 1896; Clark, Essentials of Economic Theory as Applied to Modern Problems of Industry and Public Policy, 1907; George, Progress and Poverty, 1879; Schmoller, Grundriss der allgemeinen Staatswirtschaftslehre, 1900-04; Bonar, Philosophy and Political Economy, 1893; Hobson, The Social Problem, 1901; Brooks, The Social Unrest, 1903.

On Modern Business and Industry: Veblen, The Theory of Business Enterprise, 1904; Taylor, The Modern Factory System, 1891; Hobson, Evolution of Modern Capitalism, 1894; Toynbee, The Industrial Revolution, 1890; Adams and Sumner, Labor Problems, 1905; S. and B. Webb, History of Trade Unionism, 1894, Problems of Modern Industry, 1898, and Industrial Democracy, 1902; Mitchell, Organized Labor, 1903; Ely, The Labor Movement in America, 1886; Hollander and Barnett, Studies in American Trades Unionism, 1907; Henderson, Social Elements, 1898, chs. vii.-x.