Under this head we propose to consider one general and three special problems on which society is at present at work, framing new moral standards to meet new conditions. Many of the questions involved in the new order marshal themselves under a single antithesis. Will the moral values of wealth be most fully secured and justly distributed by leaving to individuals the greatest possible freedom and holding them morally responsible, or by social agency and control? The first theory is known as individualism. The most convenient term for the second position would be socialism.

Socialism, however, is, for many, an epithet rather than a scientific conception. It is supposed to mean necessarily the abolition of all private enterprise or private property. In its extreme form it might mean this, as individualism in its extreme form would mean anarchy. But as a practical ethical proposition we have before us neither the abolition of public agency and control—extreme individualism—nor the abolition of private agency and control. We have the problem of getting the proper amount of each in order that the highest morality may prevail. Each theory professes to desire the fullest development and freedom of the individual. The individualist seeks it through formal freedom and would limit public agency to a minimum. The socialist is willing to permit limitations on formal freedom in order to secure the "real" freedom which he regards as more important and substantial. Between the extremes, and borrowing from each, is a somewhat indefinite programme known as the demand for equal opportunity. Let us consider each in a brief statement and then in a more thorough analysis.

§ 1. GENERAL STATEMENT OF THE POSITIONS OF INDIVIDUALISM AND OF PUBLIC AGENCY AND CONTROL

1. Individualism.—Individualism[234] believes that each man can secure his own welfare better than any one else can secure it for him. It further holds that society is made up of individuals, and hence, if each is provided for, the welfare of the whole is secured. Such goods as are social can be secured by voluntary association. Believing that the course of civilization has been "from status to contract," it makes free contract its central principle. It should be the chief business of organized society to maintain and safeguard this freedom. It locates the important feature of freedom precisely in the act of assent, rather than in any consideration of whether the after consequences of the assent are good or bad; nor does it ask what motives (force and fraud aside) brought about the assent, or whether there was any other alternative. In other words, it regards formal freedom as fundamental. If not in itself all that can be desired, it is the first step, and the only one which law need recognize. The individual may be trusted to take other steps, if protected in this. The only restriction upon individual freedom should be that it must not interfere with the equal freedom of others. In the economic sphere this restriction would mean, "must not interfere by force." The theory does not regard economic pressure by competition as interference. Hence it favors free competition. Leaving out of account benevolence, it holds that in business each should be allowed, or even recommended, to seek his own advantage. But when the question as to the justice of the distribution reached by this method is raised, a division appears between the democratic individualists and the "survival of the fittest" individualists. The democratic individualists—Adam Smith, Bentham, Mill[235]—believed that individualism would promote the welfare of all members of society. The "survival of the fittest" school maintains that the welfare of the race or of civilization depends on the sifting and selecting process known as the "struggle for existence." If the "fittest" are thus selected and survive, it matters not so much what is the lot of the rest. We must choose between progress through aristocratic selection and degeneration through democratic leveling.

2. Theory of Public Agency and Control.—Socialism (using the word in a broad sense) holds that society should secure to all its members the goods of life. It holds that an unrestrained liberty of struggle for existence may secure the survival of the strongest, but not necessarily of the morally best. The individualist's theory emphasizes formal freedom. "Seek first freedom and all other things will be added." The socialist view emphasizes the content. It would have all members of society share in education, wealth, and all the goods of life. In this it agrees with democratic individualism. But it considers this impossible on the basis of individual effort. To hold that society as a whole can do nothing for the individual either ignores social goods or supposes the social will, so powerful for democracy in the political sphere, to be helpless and futile in the economic world. To assume that all the control of economic distribution—the great field of justice—may be left to individual freedom and agency, is as archaic as to leave the collection of taxes, the administration of provinces, and the education of citizens to private enterprise. It regards the unregulated struggle for existence as economically wasteful and morally vicious, both in its inequality of distribution and in the motives of egoism on which it relies. Individualism, on the other hand, so far as it is intelligent and does not lump socialism with anarchy and all other criticisms on the established order, regards socialism as ignoring the supreme importance of active personal effort, and the value of freedom as the keynote to progress.

3. Equal Opportunity.—An intermediate view has for its maxim, "equal opportunity." It holds with individualism that the active personality is to be stimulated and made a prime end. But because it believes that not merely a few but all persons should be treated as ends, it finds individualism condemned. For it holds that an unregulated struggle for existence does not secure the end individualism professes to seek. When individuals start in the race handicapped by differences in birth, education, family, business, friends, and inherited wealth, there is no selection of ability; there is selection of the privileged. Hence it would borrow so much from socialism as to give each individual a "fair start." This would include public schools, and an undefined amount of provision for sanitation, and for governmental regulation of the stronger.

It is manifest, however, that this theory of the "square deal" is a name for a general aim rather than for a definite programme. For a "square deal," or equality of opportunity, might be interpreted to call for a great variety of concrete schemes, ranging all the way from an elementary education up to public ownership of all the tools for production, and to abolition of the right to bequeath or inherit property. The peoples of America, Europe, and Australasia are at present working out policies which combine in various degrees the individualistic and the socialistic views. Most have public schools. Some have provision for old age and accident through either mutual or State systems of insurance and pensions. Let us analyze the moral aspects of the two opposing theories more thoroughly. It is obvious that the third view is only one of a number of mediating positions.

§ 2. INDIVIDUALISM OR FREE CONTRACT ANALYZED: ITS VALUES

Efficiency in Production.—Individualism can make out a strong case in respect to several of the ethical qualities which are demanded: viz., efficiency in production of goods, stimulation of active and forceful character, promotion of freedom and responsibility, encouragement to wide diversification of occupation and thus of services, and, finally, the supply to society of the kinds of goods which society wants. It would be absurd to credit the enormous increase in production of wealth during the past century to individualism alone, ignoring the contributions of science and education which have been mainly made under social auspices. It would be as absurd to credit all the gains of the century in civilization and freedom to individualism as it would be to charge all the wretchedness and iniquity of the century to this same policy. But, setting aside extravagant claims, it can scarcely be doubted that Adam Smith's contentions for greater individual freedom have been justified as regards the tests named. Granting that the great increase in amount and variety of production, and in means of communication and distribution, has been primarily due to two agencies, the machine and association, it remains true that individualism has permitted and favored association and has stimulated invention.

Initiative and Responsibility.—Moreover, the general policy of turning over to individuals the power and responsibility to regulate their own acts, is in accord with one great feature of moral development. The evolution of moral personality, as traced in our early chapters, shows the individual at first living as a member of a kinship group which determines his economic as well as his religious and social life, and permits him neither to strike out independently, nor, on the other hand, to suffer want so long as the group has supplies. Individual initiative and responsibility have steadily increased, and the economic development has undoubtedly strengthened the development of religious, political, and moral freedom. It is the combination of these which gives the person of to-day the worth and dignity belonging to autonomy, self-government, and democracy.

Regulation of Production.—Further, it may be said that supply and demand, individualism's method of regulating prices and the kinds of goods produced, not only accords with a principle of freedom, but also gets those goods made which society most needs or wants. If goods of a certain kind are scarce, the high price stimulates production. While it permits crises, panics, and hardship, it at least throws the burden of avoiding hardship upon the foresight of a great many: namely, all producers, rather than upon a few persons who might be designated for the purpose. In thus providing a method to find out what society wants and how much, it is performing a social service, and, as we have pointed out, it is none the less a service because the goods are to be paid for; it is all the more so because they can be paid for. So far, then, individualism has a strong case.

§ 3. CRITICISMS UPON INDIVIDUALISM

There is undoubtedly great waste in some of its methods, e.g., its advertising and its competitions, but the most serious objections to individualism are not to be found here; they arise in connection with the other ethical criteria of economic morality. They fall chiefly under two heads. (1) Does individualism provide for real as well as formal freedom? (2) Does it distribute the benefits widely or to the few? Does it distribute them justly or unjustly?

It Does Not Secure Real Freedom.—The distinction between real and formal[236] freedom has been forced into prominence by several causes. The division of labor trains a man for a specific kind of work. If there is no opening in this he is unable to find work. The continual invention of improved machinery is constantly displacing particular sets of workers and rendering their special training worthless. A business panic causes immediate discharge of thousands of laborers. A "trust" closes several of its shops, and workmen who have purchased homes must lose their jobs or their investments, or perhaps both. The employer is no less limited in his conduct by the methods of competing firms; but it is the wage-workers who have felt this lack of real freedom most keenly. Theoretically, no one is forced to labor. Every one is free to choose whether he will work, and what work he will do. But in effect, freedom of choice depends for its value upon what the alternative is. If the choice is, do this or—starve—the freedom is not worth much. Formal freedom excludes constraint by the direct control or will of others. It excludes violence or fear of violence. But subjection to the stress or fear of want, or to the limits imposed by ignorance, is just as fatal to freedom. Hunger is as coercive as violence; ignorance fetters as hopelessly as force. Whether a man has any choice of occupation, employment, residence, or wage, depends on his physical strength, education, family ties, and accumulated resources, and on the pressure of present need. To speak of free contract where there is gross inequality between the parties, is to use a mere form of words. Free contract in this case means simply the right of the stronger to exploit the weaker.

Individualism and Justice.—Individualists, as stated, belong to two very different schools, which we may call the democratic and aristocratic, or perhaps more correctly, if we may coin a word, "oligocratic." Democratic individualism would have every man count as one. It would distribute benefits widely. It holds that since society is made up of individuals all social goods will be secured if each individual seeks and finds his own. Aristocratic individualism[237] has been reËnforced by the Darwinian theory of the struggle for existence as a condition for "survival of the fittest," by race prejudice, and by imperialism. It holds that civilization is for the few "best," not necessarily for the many. Progress lies through the selection of the few efficient, masterful, aggressive individuals, races, or nations. Individualism is a policy which favors these few. It is Nature's method of dealing. It is of course regrettable that there should be weak, backward, ineffective individuals or races, but their exploitation serves the advance of the rest, and benevolence or charity may mitigate the most painful results.

The older economists of democratic individualism could properly claim two respects in which economic justice was furthered by economic processes under free management and exchange. The social body is in truth made up of members, and the old policy had been to tie up the members to make the body grow. It did promote justice to remove needless and excessive restrictions. In the second place, it is true, as the economists insisted, that in a free exchange each party profits if he gets what he wants. There is mutual benefit, and so far as this goes there is an element of justice. But while the benefit may be mutual, the amount of advantage each gets is not necessarily the same, and if the party who has greater shrewdness or resources takes advantage of a great need on the part of the other, the result may be a very unequal division. Exchanges of a birthright for a mess of pottage will be common. Very well, says the individualist, Esau will know better next time—or if he doesn't, he is an object for charity. But the trouble is that even if Esau does "know better" he is in even poorer condition next time to make a bargain if his birthright is gone; besides, if starvation or misery for himself or his family is his only alternative, what good will it do him to "know better"? Can the result, then, be just or fair? This depends on how we define "just" and "fair." If we take a purely formal view and make formal freedom of contract the only criterion, then any price is fair which both parties agree to. The law for the most part takes this view, assuming absence of force or fraud. But this leaves out of account everything except the bare formal act of assent. It is too abstract a conception of personality on which to base a definition of justice. To get the true organic relation of mutual service and benefit by a system of individualism we must have the two parties to the bargain equal. But in a large part of the exchange of business and services the two parties are not equal. One has greater shrewdness, better education, more knowledge of the market, more accumulated resources, and, therefore, less pressing need than the other. The moral consciousness will call prices or contracts unfair where the stronger takes advantage of the weaker's necessities, even if the law does not.

Competition.—The fact of competition is depended upon by the individualist to obviate the disadvantages of the weaker party. If A is ignorant of the market, B may impose upon him; but if C and D are competing with B for A's goods or services, A will soon find out what they are "worth." That is, he will get for them a social and not a purely individual valuation. There is doubtless such a gain to A. But in considering competition as removing the objections to the unfairness possible in bargaining, we must bear in mind two things. First, competition cuts both ways. It helps A when several compete for his goods or labor; but, on the other hand, it may ruin one of the competitors. If A is a laborer, it is a good thing if X, Y, and Z, employers, compete for his services. But if the boot is on the other foot, if B, C, and D also are laborers and compete with A for a place, we have the conditions which may lead to the sweat-shop. Whether there is any better way to avoid unequal distribution will be considered later. The second and seemingly fatal objection to competition as a means to justice, is that free competition under an individualistic system tends to destroy itself. For the enormous powers which the new forms of economic agency and technique give to the individual who can wield them, enable him to crush competitors. The process has been repeated over and over within the past few years in various fields. The only way in which a semblance of competition has been maintained in railroad business has been by appeal to the courts. This is an appeal to maintain individualism by checking individualism, and as might be expected from such a contradictory procedure, has accomplished little. Nor can it be maintained that the evils may be obviated, as Spencer holds, by private restraints on excessive competition. As already pointed out, if one of a body of competitors is unscrupulous, the rest are necessarily at a disadvantage. Under present conditions individualism cannot guarantee, and in many cases cannot permit, just distribution and a true organic society.

The other school of individualists is not disturbed by inequality of goods. It frankly accedes to the logic of unrestrained competition. It stakes its case upon the importance for social welfare of the exceptionally gifted few. It is important to have their services. It can have them only on terms which they set, as they will not work unless there is sufficient motive. It is, on this view, perfectly just that all the enormous increase of wealth due to modern methods should go to the few leaders, for their ability has produced it all. "The able minority of men who direct the labor of the majority are the true producers of that amount of wealth by which the annual total output, in any given community, exceeds what would have been produced by the laborers if left to their own devices, whether working as isolated units or in small self-organized groups, and controlled by no knowledge or faculties but such as are possessed in common by any one who can handle a spade or lay one brick upon another."[238]

Either from the standpoint of natural rights or from that of utilitarianism it is proper, according to this school, that all the increasing wealth of society, now and in all future time, should go to the few. For, on the one view, it belongs to the few since they have produced it; and, on the other, it must be given them if society is to have their services. It is possible they may not claim it all for their exclusive possession. They may be pleased to distribute some of it in gifts. But this is for them to say. The logical method for carrying out this programme would require an absolute abandonment by the people as a whole, or by their representatives, or the courts, of any attempt to control economic conditions. The courts would be limited to enforcing contracts and would cease to recognize considerations of public interest except in so far as these were accepted by the able minority. All such legislation as imposes any check upon the freedom of the individual is mischievous. Under this head would presumably come regulation of child labor, of hours, of sanitary conditions, of charges by railroads, gas companies, and other public service corporations. Graded income or inheritance taxes are also to be condemned from this standpoint. It should in fairness be added that while its upholders do not allege as their main argument that individualism is for the interest of the many, they hold, nevertheless, that the many are really better off under individualism than under socialism. For since all the increase in wealth is due to the able few whom individualism produces, and since some of this increase, in cases where the few compete for the custom or labor of the many, may fall to the share of the many or else be given them outright by the more generous, it appears that the only hope for the many lies through the few.

The general naturalistic theory has been discussed in Chapter XVIII. Here it is only necessary to point out that it is a misreading of evolution to suppose unregulated competition to be its highest category of progress, and that it is a misinterpretation of ethics to assume that might is right. With the dawn of higher forms of life, coÖperation and sympathy prove stronger forces for progress than ruthless competition. The "struggle" for any existence that has a claim to moral recognition must be a struggle for more than physical existence or survival of force. It must be a struggle for a moral existence, an existence of rational and social beings on terms of mutual sympathy and service as well as of full individuality. Any claim for an economic process, if it is to be a moral claim, must make its appeal on moral grounds and to moral beings. If it recognizes only a few as having worth, then it can appeal only to these. These few have no moral right to complain if the many, whom they do not recognize, refuse to recognize them.

Summary of the Ethics of Individualism.—Individualism provides well for production of quantity and kinds required of goods and services; for activity and formal freedom. Under present conditions of organization and modern methods it cannot be made to serve a democratic conception of justice, but inevitably passes over into a struggle for preËminence, in which the strong and less scrupulous will have the advantage. It can be treated as just only if justice is defined as what is according to contract (formal freedom); or if the welfare of certain classes or individual members of society is regarded as of subordinate importance; or, finally, if it is held that this welfare is to be obtained only incidentally, as gift, not directly through social action. The criticism on individualism is then that under a collective system like that of the present, it does scant justice to most individuals. It leaves the many out from all active participation in progress or morality.[239]

Individualism and Socialism are discussed in the works of Hadley, Veblen, Hobson, Spencer, Marx, George, already cited; cf. also Menger, The Right to the Whole Produce of Labor, 1899; Ely, Socialism and Social Reform, 1894; Bosanquet, Individualism and Socialism, in The Civilization of Christendom, 1893; Fite, The Theory of Democracy, International Journal of Ethics, xxviii. (1907), pp. 1-18; Huxley, Administrative Nihilism, in Essays; Godwin's Political Justice, 1793, raised many of the fundamental questions. Recent representative Individualistic works are: Spencer, Social Statics, The Man versus the State, various essays in Vol. III. of Essays; Sumner, What Social Classes Owe to Each Other, 1883; Donisthorpe, Individualism, 1889; Harris, Inequality and Progress, 1897; Mallock, Socialism, 1907. On Socialism: Fabian Essays in Socialism, edited by Shaw, London, 1890, New York, 1891; Spargo, Socialism, 1906; Marx and Engels, The Communist Manifesto, Eng. tr.; Reeve, The Cost of Competition, 1906; Rae, Contemporary Socialism, 1891; Hunter, Socialists at Work, 1908; Wells, New Worlds for Old, 1907.