Industrial capitalism or the exploitation of labor is not entirely a condition of modern times. It flourished in nearly all the buried civilizations of the past, and was an important factor in their decay. But it differed in one important particular from the capitalism which has succeeded feudal society. It depended mainly upon slaves for productive labor. The free producers had to contend against slave competition, and, as wars of conquest continually augmented their numbers, the slaves finally ousted the free workers, who in the long run became merged into the growing class of serfs, which also assimilated the slaves. And out of serf-laborers again emerged a free working class, but this time without any inferior competing body of toilers.

The laborer under the feudal condition did not compete as a wage-worker against others. His work and subsistence were guaranteed him in return for fixed services, which left him without personal freedom. Industrialism with greater individual liberty began to grow in cities and towns, to which serfs gladly fled from the land to sell their labor to the rising class of capitalist employers. Underneath feudalism lay a brutal and selfish individualism of status, which existed only for the benefit of the oligarchy. But capitalism broke up this state by developing a wider, freer individualism, not based on social status, but upon industry and exchange. It offered a greater opportunity to the producer, rendered him more self-reliant and independent, and generally gave him a position superior to his former state. That it offered advantages to the workers can hardly be denied; else it could not have steadily grown by means of voluntary recruiting from the land. Organized production, division of labor, and commercial exchange had reached an advanced stage and was absorbing an increasing proportion of the laboring population when the great industrial revolution, beginning in England with the latter part of the eighteenth century, by the aid of invention, steam power, and machinery transformed capitalism into the greatest of economic forces.

Capitalism in this phase requires larger and ever larger accumulations of wealth in the form of exchange values in order to secure its existence. This is the indispensable condition of the capitalist system of production; and, moreover, it is just the point on which it is superior to every preceding economic system. By reason of its enormous accumulation of exchangeable wealth it renders life and labor more secure for the whole of society. Because wealth employed as a source of income can only accomplish its purpose in proportion as it is used productively and creates a demand for human activity. It augments the means of subsistence. We are here comparing the results of capitalism with previous economic states, not with any ideal; merely noting facts, not constructing theories.

Though it may be true that in an earlier period it was possible for the individual man to procure the prime necessities by direct labor, as the savage today is in this respect less dependent than the civilized man, yet it is equally certain that his means of life on the average were more precarious. His wants were fewer than those of a man of today, for our needs grow at a much faster rate than our means of satisfying them, and modern conditions are continually creating new wants which were undreamt of by our ancestors. But even those fewer wants were supplied in pre-capitalistic times with more trouble and risk than the wage slave of capitalism usually undergoes to supply his much greater needs. Besides, in former times the economic life of the whole population was more uncertain and insecure than capitalism has now rendered the average lot of the masses. There is less danger of death by famine through any cause whatever, though wars, pestilences, etc., still act and react injuriously upon the industrial classes, but in a much less degree than ever before.

Capitalistic society has its source in individualism, but, as already explained, when this principle has a wider scope, it necessarily results in an enlargement of what I might here call economic altruism. For capitalistic production as an essential condition to individual success has led men to study the needs of others, literally to provide for them: they are impelled to act in such a way that the general result is an increase of human happiness. Witness the ordinary economic effects. Increasing capital, improved methods, larger and larger production, reduced cost, cheaper and more abundant commodities, allow every body to satisfy his wants with less exertion.

The unconscious coöperation which capitalism has certainly brought about is more widespread and has resulted in greater benefits to all than could ever have been conceived by any consciously-regulated system based on theoretic coöperation. Yet capitalist coöperation is the direct outcome of individualism. Its results are none the less beneficent and valuable.

Though the usual method of attacking existing economic arrangements is vague and unsatisfactory, it is surely not unreasonable to look for some alternative system, some more fitting economic principle, from those who undertake any serious criticism. Nor should we be disappointed. The question arises as to what constitutes the essence of the proposed methods.

I believe it is a truthful description to say that consciously combined economic effort—combined not purely for individual benefit but for the collective interest—is the essence of all systematic alternatives to capitalism. Coöperation, in voluntary groups or in organized communities, under free conditions or State authority, associated control of exchange values either by separate classes of producers or by the nation, one or other of these forms of coöperation is held forth by the economic regenerators as superior to the present industrial order and hence more desirable.

Now, it is historically true that not merely were such methods unsuited to the conditions, economic, social, and moral, under which capitalism developed, but, even if they had been possible, they could never have accomplished the incalculable work for the advancement of the human race which the capitalist system has already achieved. We have not the least reason to believe that the working classes could have organized their own labor for their mutual benefit, even had they been allowed control of the means of production,—represented then by land and other natural media,—or that any form of coöperative industry of the Utopian order could have successfully survived amid the times and conditions in which originated and grew the industrial system of capitalism.

Nay, in view of the facts, it is beyond all question that, had mankind to wait until conscious and ideal economic coöperation was capable of assuming the functions which capitalism became fitted for and has so substantially performed, we should still be very far behind the stage of progress already reached. Observe the gigantic failures of all efforts in this direction hitherto attempted,—their inadequacy compared with the individualistic industrial performances, whose unconscious efforts lead none the less to the results to which those less successfully aspire. For when they seem to show any success,—which however never equals the best otherwise attained,—it is only when they become in method and in fact capitalistic. I may have occasion later to discuss this question, than which none in economics is more befogged in blind faith, prejudice, and sentimentalism. At present I shall only add, to make clear the above and bring out my meaning, the instance of the economics of the famous institution known as the Village Community.

This system of agrarian industrialism based at once on ownership of the means of production, the land, by the producers and on conscious coöperation as the method of using it, was, and is, marked by the absence of all progress, and by a stereotyped conservatism, which in its non-progressive results conclusively proves its inferiority to capitalism. The Russian mir is one of the best surviving instances.

The enormous extent of unconscious and indirect cooperation which the present system on purely individualist lines has developed in an all-embracing net-work around the earth is generally overlooked by its opponents.

We see the people of Yorkshire and Lancashire in England working on fabrics to cover the black skins of the inhabitants of tropical Africa and to clothe the sheep-raisers of New Zealand, and in return being fed by the wheat, beef, and pork produced on great capitalist farms on the slopes of the Rocky Mountains or the valleys of the Mississippi. While, be it remembered, the English workers are better off in consequence of this capitalistic coöperation than if they followed primitive methods and raised their subsistence themselves from the soil on which they live: and the other participants benefit in like manner by the arrangement.

What is true of this instance is equally true all round.

In fact, the hopes raised by modern economic ideals are wholly the outcome of the observed achievements of capitalistic methods of industry. The writings of social reformers, Communists, etc., furnish ample proof, notwithstanding the Platonic and Utopian social ideals of former ages.

As before observed, the modern economic system requires vast accumulations of exchange values; and, at least in the earlier stages of machine industry, their concentration was also indispensable. To meet the unprecedented expansion consequent on the industrial revolution a rapid development and storing-up of capital for productive purposes could not be avoided.

Under the individualist system, not yet having attained the period of good results, the working classes were obliged to bear this strain. They were overworked and underpaid. This is a positive and deliberate statement of fact. It was not that they were relatively ill-paid and hard-worked; they received a much smaller proportion of the results of their labor, of the total product, than at any past time or probably any time since. The only mitigating circumstance being that the people thus made to suffer were a new industrial class mostly taken from agriculture and were probably in quite as bad a plight (if not worse) in the conditions they left as they found themselves in under the new machine system of industry. But these and many other evils were the necessary products of a transitory stage, a sudden and unprecedented revolution, and formed no essential part of the new system. The cause of the evils brought the remedy. Capital increased with still greater rapidity, and in this continuous accumulation of exchange values beyond the first imperative needs lay the antidote to the abuses.

This review has prepared us to find out, with a better chance of succeeding, how individual liberty has fared during the economic change. It would here prove instructive if we were to trace the results in the political history of the period. We should see that the political aspect of liberty has its root in economic conditions and changes, that the former is the result of the latter, and that a progressive movement towards political liberty is conclusive proof of an economic advancement. This subject must, however, be passed over; it is not indispensable to our inquiry. The result of the foregoing review, I hope, will show that capitalism takes a necessary place in economic evolution; that alternative schemes are barren of all results that have any bearing upon the point at issue; and that individual freedom cannot be found to have lost ground in the conflict. The social and sentimental side of economic development I have purposely left out. Because an enumeration and discussion of the evils of capitalism would not further us in the object now in view. We shall endeavor to find their causes in due course, and attempt to answer the questions, whether such evils are part of the nature of things, whether they form the unavoidable consequences of economic progress and a greater liberty, and whether we can safely look to further economic change in the same line of development to solve the social problem.

Wm. Bailie