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NEW FALLACIES OF MIDAS 
 
NEW FALLACIES OF 
 MIDAS 
 
 ^ SVKVEY OF INDUSTRIAL 
 ^ND ECONOMIC ^PROBLEMS 
 
 BY 
 
 CYRIL E. ROBINSON. 
 
 With an Introduction by 
 SIR GEORGE PAISH. 
 
 NEW YORK 
 ROBERT M. McBRIDE & COMPANY 
 
 1919. 
 

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 ^^ 
 
 PREFACE 
 
 Books on Political Economy increase and multiply. 
 They are a natural by-product of the war, which has 
 caused all classes to take stock afresh of their economic 
 destiny ; nor is it much wonder, when all is topsy-turvy, 
 that a new diagnosis should be drawn and a new remedy 
 prescribed by half-a-dozen authors in each week. 
 
 But, while the demand for economic literature is 
 great, and the supply keeps pace with the demand, 
 there still perhaps lacks something. Amid all the 
 maze of argument and theory, the puzzled layman 
 needs some guide : yet there is no one book to give 
 him precisely what he wants. We have excellent 
 manuals, wide in scope, strict in method, scientific 
 in approach : but too often the manual makes dull 
 reading ; its language is academic, overweighted with 
 a jargon of technicalities and abstract definition. 
 It may be true that Socialism is " a coercive co-opera- 
 tion, not merely for undertakings of a monopolisitic 
 nature, but for all important productive enterprises " ; 
 but, however true the words, the mind is apt to falter 
 at such formal logic ; and the very need for a thorough 
 exposition, which will press analysis to its extreme, 
 must yet serve to blunt the writer's own enthusiasm 
 and leave the reader cold. The manual, with the best 
 will in the world, can seldom touch the matter into 
 life. 
 
PREFACE 
 
 There is another class of book, aiming at a different 
 goal — I mean the monograph which isolates some 
 single phase or aspect of the science, or the pamphlet 
 written to propagate some theorist's special creed. 
 Such, for instance, is Mr. Ramsay Macdonald's 
 ** Socialism " ; and such again is Mr. Belloc's " Servile 
 State." From the manual's inevitable failing these 
 are free. Tlicy must, at all costs, interest and con- 
 vince : it is the first condition of success. Yet for 
 that very reason these too will often fail to satisfy the 
 reader. They preach indeed : but are at little pains 
 to criticise the sermon. They assume the best or 
 prophesy the worst : yet leave the reverse of the picture 
 too much dark. Such books, too, are of their very 
 nature selective and incomplete : behind their argu- 
 ments lie many issues boldly ignored and assumptions 
 unexplained. They have not space for everything : 
 the problems of production, the ethics of exchange, the 
 safe limits of monopoly, and the natural interaction 
 of supply upon demand, how wealth is to be got before 
 it can be divided, or how divided under other rival 
 schemes — all this can be but lightly touched, if 
 touched at all : yet all this the interested reader must, 
 as he thinks things out, desire to know. There is a 
 gap in the evidence ; his judgment of the case is 
 insecure ; and he will be thrown back upon the manual 
 after all. 
 
 To imitate the virtues and escape the short-comings 
 of both types is the chief effort of this book. It 
 makes no pretence to cover all the ground ; but it 
 covers much. Theories are not advanced uncritically : 
 but each shall at least receive a favourable hearing, 
 before it is rejected. Rather than leave the funda- 
 
PREFACE 
 
 mental issues doubtful, I have begun at the beginning : 
 and there can be no making matters clear without 
 some monotony of formal spade-work and abstract 
 definition ; yet I have tried, so far as may be, to avoid 
 the use of academic phrasing or mechanical expression. 
 
 Nor have I wished to lose from sight those ethical 
 and political values, which, though they are not 
 strictly economic, were far too often neglected by the 
 early economists. I have tried to foresee the conditions 
 upon which man's happiness must be built, as Well as 
 the methods whereby his wealth is to be got. To be 
 content with cold analysis is to-day impossible : 
 the problems are too vital : and, though all prophecy 
 is dangerous, we must needs anticipate some practical 
 solution. We must confront the future in the strength 
 of some reasoned faith. 
 
 Without the advice and guidance of Sir George Paish^ 
 the undertaking must have been far less ambitious. 
 His kindness in writing the introductory chapter has 
 placed me very much in debt : but it is perhaps the 
 least of the debts I owe him. My special thanks are 
 also due to Mr. A, E. Zimmern for his helpful revision 
 of the chapters. 
 
CONTENTS 
 
 CHAPTER PAGE 
 
 Introduction by Sir George Paish. - - xi 
 PART I. 
 
 I. THE FALLACY OF MIDAS - - - - 7 
 
 II. WORK 12 
 
 III. CAPITAL - 24 
 
 IV. THE PARADOX OF PROGRESS - - - 32 
 V. LUXURIES AND NECESSITIES - ' " 39 
 
 VI. EXTRAVAGANCE AND WASTE - - . 47 
 
 VII. UTOPIA - - 59 
 
 PART II. 
 
 VIII. VALUE 79 
 
 IX. MONOPOLY ------ 90 
 
 X. THE POWER OF CAPITAL - - - 102 
 
 XI. THE PROTEST OF RUSKIN - - - II6 
 
 XII. THE RISE OF LABOUR . - - - I32 
 
 XIII. SOCIALISM ' - 156 
 
 XIV. FALSE SOCIALISM OR THE SERVILE STATE - 183 
 XV. SYNDICALISM OLD AND NEW - - - 197 
 
 XVI. THE RIGHTS OF THE INDIVIDUAL - - 210 
 
 XVII. COMPROMISE - 234 
 
 XVIII. THE NEW FALLACIES OF MIDAS - - 268 
 
INTRODUCTION BY SIR GEORGE PAISH 
 
 Of the many objects for which this war was begun it is 
 now beyond question that the main one was the pre- 
 servation of mihtary autocracy in Germany and in 
 Austria. It is now equally evident that of the many 
 consequences of the war the chief one will be the 
 emancipation of democracy, not merely in Germany, 
 in Austria and in Russia, but throughout the world. 
 
 In Russia, where events have moved faster than 
 elsewhere, revolution is already well on its way to its 
 final stages. It is true that so far a bureaucratic 
 autocracy appears to have been merely replaced by 
 an oligarchy. Nevertheless the eventual introduction 
 of democratic government is not much in doubt, and 
 it is probable that the people of Russia will for the 
 future control their own destinies by means of small 
 republics for local matters and of a federal republic for 
 national and international affairs. 
 
 In the Austrian Empire revolution and dissolution 
 have taken place already, and probably somewhat 
 similar conditions to those prevailing in Russia will be 
 witnessed both in Austria and in Hungary in the early 
 future. Small local republics are likely to be formed, 
 and eventually some kind of federal republic, including 
 the greater part of the existing Austrian Empire 
 together with some of the Balkan States, will probably 
 emerge from the chaos. 
 
 In Germany the revolutionary movement towards 
 democracy is causing great uneasiness to the enemy 
 government, and there are strong reasons for expecting 
 that before many days pass by the militarist autocracy 
 
 xi. 
 
xii. INTRODUCTION 
 
 of Germany will be forced, to yield place to a democratic 
 republic. 
 
 The nemesis now falling upon the rulers of Germany 
 and of Austria, as well as upon the classes that have 
 supported autocratic and military domination, will 
 be an object lesson which cannot fail to be understood 
 by the rest of the world, and even in countries already 
 democratic a greatly increased measure of democratic 
 freedom and of democratic power must result from 
 the revolutions now casting their shadows in front of 
 them over the enemy states. 
 
 Already some uneasiness exists as to the effect upon 
 progress and upon civilisation of the emancipation of 
 the peoples from the domination of one kind or 
 another to which they have hitherto been subjected 
 in greater or in lesser degree in all countries. At 
 such a moment it is essential for everyone to recognise 
 that the increased freedom of democracy in the 
 western world in modern times has brought with it not 
 injury but advantage to the general well-being of the 
 world, and that in democratic countries law' is more 
 universally respected and more equitably administered 
 than in autocratic states, while, on the whole, order 
 is better maintained. 
 
 In periods of transition disorder cannot always be 
 avoided, but as soon as public opinion becomes con- 
 vinced about the right course to pursue, and democracies 
 mobilise their power, there is far less danger of disturb- 
 ance and of any breach of law in the democratic 
 countries than in autocratic states, where the interests 
 of the people and of their rulers are divergent. There- 
 for, after the period of transition that must inevitably 
 follow upon the conclusion of peace, in which 
 
INTRODUCTION xiii. 
 
 the autocratic nations will become democratic and the 
 democratic nations more democratic, there will be 
 less danger of disorder throughout the world than there 
 has been hitherto. For all practical purposes the 
 danger of democratic nations acting unjustly or 
 failing to maintain order and respect for law or refusing 
 to honour their obligations may be completely dis- 
 regarded. The rise of democracy means a high 
 standard of honour, the recognition of justice, the 
 observance of law and greater security, both for life and 
 for property. 
 
 At no time did the credit of Republican France stand 
 higher than it did before the war ; at no time has France 
 been more highly respected or more fully trusted than 
 at the present moment, and no one doubts her intention 
 or her ability to honour the great debt she has incurred 
 in waging this life and death struggle for democracy 
 againsi autocracy, or to act justly, indeed, mercifully, 
 not only towards all sections of her own people, but 
 towards all other nations which desire and intend to 
 live in harmony and in friendship with her, and to 
 observe those principles of freedom, equality and 
 brotherhood which are the glory of modern France. 
 
 Again, democratic America, which is the greatest 
 marvel of modern times, reveals clearly the increasingly 
 high standards of conduct demanded by democracies. 
 The credit of no country was higher than that of 
 America before the war, or will be higher after the war, 
 and in no country was education more highly appre- 
 ciated, was there a greater love of justice, greater 
 sympathy for the oppressed and the unfortunate, 
 greater equality of opportunity and of self-realisation, 
 a higher measure of individual happiness, or a greater 
 
xiv. INTRODUCTION 
 
 rate of improvement in individual and national well- 
 being. 
 
 It is unnecessary to speak of the place that demo- 
 cratic Britain holds in the family of nations. It is 
 sufficient to point to the policy which the British nation 
 has pursued since the passage of the great Reform Bill, 
 of promoting her own well-being by contributing to 
 the well-being of all the world, and to the manner in 
 which her sons and her daughters wherever they were 
 placed, at home, in the colonies, and abroad, voluntarily 
 came forward to defend the principles of freedom and 
 of justice, which are dearer to them than life itself, by 
 placing all that was theirs at the service of democracy 
 in the struggle in which it is still engaged. 
 
 Thus not theory but experience of democracy proves 
 that the democratic spirit is not destructive, but con- 
 structive, not law breaking but law abiding, not less 
 but more just than the spirit of autocracy, not wishful 
 to dominate but to give freedom, not less but more 
 desirous of creating high standards of honour and of 
 duty. And with this experience upon which to base 
 our judgment are there any reasonable grounds for 
 anxiety as to the future when the democratic spirit 
 shall be more widely prevalent ? Rather are there not 
 greater and stronger reasons for hopefulness as to what 
 the future has in store for all nations, and more es- 
 pecially for the nations in which the democratic spirit 
 reaches its highest development ? 
 
 In the turmoil and uncertainties of the present 
 situation, when society, more particularly in its 
 political and economic aspects, is in process of complete 
 reconstruction, not merely in one or two countries but 
 in all countries, it is of the highest importance to 
 
INTRODUCTION xv. 
 
 observe certain elementary and primary truths, in 
 order that the new structure may be erected upon such 
 soHd foundations, and so strongly built, as to leave no 
 doubt as to its permanence, its utility and its com- 
 prehensiveness. 
 
 The first of these truths is that the structure of 
 society in each nation as well as of the whole world, 
 whether upon its political side or its economic, or its 
 social, or its religious, must be based upon the character 
 of each nation, for just as character inevitably governs 
 the aspirations, the activities, and the attainments of 
 individuals, in the same manner national character 
 must govern the structure of nations. 
 
 The second of these truths is that the structure of 
 society in each nation cannot be mucii in advance of the 
 mental and spiritual development of the average 
 individual, and that no nation can rise to the level of its 
 possibilities until the individual is both educated and 
 enlightened. 
 
 The third is that the economic possibilities of a nation 
 in these days of international intercourse and of inter- 
 national transit are governed not so much by its own 
 natural resources as by the mentality and character 
 of its people. 
 
 And the last is that in a world of nations firmly bound 
 together by democratic principle every nation would 
 not only have world wide markets for its productions, 
 but would be assisted to produce all that its natural 
 resources permit it to produce or the intelligence and 
 skill of its peoples render it capable of manufacturing. 
 The limits hitherto placed both upon consuming power 
 and upon production would therefore disappear, and 
 the measure of well-being in each nation would accord 
 
xvi. INTRODUCTION 
 
 with its intelligence, its knowledge and its energy. 
 The possibilities of national and of international well- 
 being would thus be limitless. 
 
 By observing these fundamental matters it is not 
 difficult to discover the course which the various 
 nations are likely to pursue in a democratic world in 
 which both individuals and nations will enjoy much 
 greater freedom for their activities than hitherto, sub- 
 ject only to the principles of friendship and of co-oper- 
 tion which will cause them to seek to prom^ote their 
 own well-being by contributing to the general welfare 
 instead of seeking advantage at the expense of others. 
 
 Thus the great mass of the Russian people are 
 imaginative, idealistic, and benevolent, but at present 
 they are unedncated, ill-informed and therefore 
 unpractical. At the same time the natural riches of 
 Russia are unlimited, and when the Russian people are 
 educated, better informed and more practical Russia 
 is likely to become one of the richest, if not the richest 
 nation in the world, not even excepting the United 
 States. 
 
 The present character of the Russian people and their 
 present development make them specially fitted for 
 agricultural pursuits, but render them unsuitable for 
 occupations demanding a high measure of concentra- 
 tion and of business capacity. Their childlikeness 
 and lack of knowledge render them incapable of 
 initiative and of independent judgment, and conse- 
 quently they are accustomed to communal co-operation 
 and to state assistance and control. In this mental 
 condition the freedom they will now enj oy will doubt- 
 less cause them to make communal production and 
 trading still more comprehensive. Further, with the 
 
INTRODUCTION xvii. 
 
 disappearance of the nobles they will probably demand 
 a greater measure of assistance from the State in 
 obtaining the additional machinery they will need to 
 expand their productions, as well as in the work of 
 transporting their produce at home and abroad. The 
 economic system of Russia for some time to come must 
 necessarily be a combination of Communism and of 
 State Socialism. 
 
 In Germany and Austria also the environment in 
 which the great mass of the people have hitherto been 
 placed renders them quite incapable of thinking for 
 themselves, and inasmuch as everyone has so long 
 been accustomed to rely upon the State in all matters, 
 the German as well as the other peoples of the two 
 countries, even when they completely control and are 
 responsible for their own governments, will still necess- 
 arily continue to need the help of the State. Hence, 
 for a time at any rate, any government that may be 
 set up, whether it be a limited monarchy, or as seems 
 most probable, a republic, will be compelled by force 
 of circumstances to pursue a policy of State Socialism 
 of the purest description. 
 
 On the other hand the French people are accustomed 
 to individual thought and initiative, and desire great 
 individual freedom, not only in agriculture but in 
 industry. Consequently, there is a general disposition 
 shown by workmen to adopt co-operative methods of 
 manufacture rather than to continue to be employed 
 by individual capitalists. This disposition is due to 
 their desire for a voice in controlling their own lives, 
 as well as to their wish to participate in greater measure 
 in the profits of industry. The character of the French 
 people thus points to an individualistic economic policy, 
 
xviii. INTRODUCTION 
 
 in so far as it is of advantage to the average citizen, and 
 to what is known as SyndicaHsm, or Guild Socialism, 
 when industries must be carried on by large numbers of 
 persons working in co-operation. 
 
 In brief, whereas in Russia, Germany and Austria, 
 the people will gain a much larger measure of freedom 
 by setting up democratic governments and imposing 
 upon them still more comprehensive duties than were 
 performed, even by the autocratic governments they 
 will supersede, in France a greater measure of indi- 
 vidual responsibility for the great mass of the people 
 in the conduct of industry, will carry the nation along 
 the path leading to individual liberty. 
 
 In the United States, the workers generally are in 
 favour of individualistic effort, but are opposed to the 
 control of industries by a few persons of great wealth 
 and of great power. Therefore, in America as in 
 France, the character of the nation and the course of 
 events seem to lead to the control of industry by the 
 workers. Hitherto labour, both manual and pro- 
 fessional, has been hired by capital at the remunera- 
 tive rates current in that country. In the future it is 
 likely that manual labour, allied with professional skill, 
 will hire capital at the remunerative rates which capital 
 in such a wealthy country as America will always be 
 able to command. The application of this principle 
 is already very far advanced in such undertakings as 
 railways, where public opinion is averse to the payment 
 of higher dividends than needed to permit new capital 
 to be raised as required, where policy is controlled by the 
 staff, and where the rate of remuneration to the 
 employees is as high as the public considers just or is 
 willing to approve. 
 
INTRODUCTION xix. 
 
 The British people are essentially independent and 
 individualistic, they hate authority and dislike control, 
 unless self-created and self-imposed. Their most 
 pronounced characteristic, and their greatest asset, is a 
 fund of what is generally described as common sense 
 and a sense of proportion, and they prefer to judge each 
 question on its merits, when they are compelled by force 
 of circumstances to come to a decision, rather than 
 allow their decision to be governed by theoretical 
 considerations alone. When they have the choice of 
 two policies they usually follow the one which promises 
 to give the best results, however hazardous it may be, 
 and are quick to follow a leader who shows boldness 
 and enterprise, combined with practical wisdom. 
 Their love of adventure has not only made them a 
 sea-faring nation but has led them to take chances of 
 all kinds. Hence they have been for many years and 
 still are the most enterprising of all the nations. The 
 activities of their bankers, manufacturers, merchants, 
 shipowners, under-writers, contractors and producers 
 generally, are world-wide, while their investors are 
 interested in almost every great enterprise wherever 
 it may be situated, from the North to the South Pole. 
 
 In the work which these few notes will introduce to 
 the reader Mr. Robinson gives a valuable, an instruc- 
 tive and an impartial survey of the trend of economic 
 thought and of economic policy in modern times, and 
 in his concluding chapters he deals faithfully with the 
 questions of Socialism, Syndicalism or Guild Socialism 
 and Individualism. These chapters necessarily reflect 
 anxiety as to the economic policy which this country 
 may pursue when the spirit of democracy is as prevalent 
 and as highly developed as it is likely to be after the war. 
 
XX. INTRODUCTION 
 
 Analysis of the British character and disposition, 
 however, should dispel any uneasiness or anxiety as to 
 the course which the British nation will take when peace 
 is restored. The qualities that have made the British 
 nation what it is have not been destroyed by the war, 
 rather have they become strengthened. To bear 
 successfully and easily the strain of a great war in the 
 manner the British people have borne it is the result 
 not of the war but of the character the people 
 possessed prior to the war and of the policy they have 
 pursued during the last two generations, in which 
 individual freedom, independence and responsibility 
 have grown steadily greater. That democracy will be 
 freer after the war is the strongest possible testimony 
 to the soundness of the policy which democracy has 
 pursued hitherto. The war has merely brought 
 British democracy nearer the goal towards which it 
 has been walking, with more or less consistency, for 
 a very long time. 
 
 What, then, is likely to be the economic policy of this 
 country after the war, when democracy will have much 
 greater power than it has had hitherto ? 
 
 It is evident that democratic policy after the war 
 will not differ in essentials from democratic policy prior 
 to the war. It will be bolder, bigger and more con- 
 fident, but much the same in essentials. For many 
 years British democracy has endorsed the principle 
 that the State should perform those functions it is 
 specially fitted to perform, and which other organisa- 
 tions could not accomplish or not accomplish so well. 
 The State includes, of course, both the national and 
 local authorities. The community in its corporate 
 capacity has undertaken the work of maintaining the 
 
INTRODUCTION xxi. 
 
 roads, of collecting and delivering letters, of producing 
 and distributing gas, water and electricity, of pro- 
 viding a telephone service, of educating the children, 
 and of performing other duties which it could perform 
 with great advantage. After the war the State will 
 probably extend its activities to railway transporta- 
 tion, which can be rendered much more useful and of 
 much greater value by unification, to insurance of the 
 working classes against all the misfortunes to which 
 they are subjected, including unemployment assur- 
 ance for all, as well as widowhood insurance, and 
 to a number of other things which urgently need 
 to be undertaken by the State. But these things 
 will not be undertaken until the British people are 
 convinced that such a course is in the general interest 
 and the proposal to undertake them does not warrant 
 uneasiness. 
 
 Again, it is probable that the principle of co-opera- 
 tion, which is really what is meant by Syndicalism and 
 Guild Socialism, when the latter are shorn of their 
 sinister attributes, will be extended from distribution, 
 insurance, clubs and other ventures to production. 
 
 If the extension of co-operation to production is 
 successful as under present circumstances it is likely to 
 be, the benefit to the nation will be very great, for then 
 the workers will be their own masters, and the con- 
 stantly arising friction between capital and labour will 
 for ever disappear. But it is obvious that co-operative 
 production can be introduced into very few industries, 
 at any rate until a great deal of experience is gained of 
 its working. Coal mining seems to be the one industry 
 adapted to the new departure where the workers are 
 anxious to try the experiment. Provided that the 
 
xxii. INTRODUCTION 
 
 miners secure the capital to take over the mines, and 
 do not attempt to obtain them by violence, nothing but 
 good could arise from the mines passing into the 
 possession of the workers themselves, who not only 
 labour under such unfavourable conditions, but who 
 daily expose their lives to unknown dangers in pursuing 
 their calling. Of course, even if the miners wished to 
 confiscate the mines, the British people would not 
 sanction confiscation, as such a course is entirely 
 contrary to the national character. The British people 
 have never failed to pay handsomely for any property 
 they desired to acquire for national or other purposes, 
 and there is less likelihood than ever of their doing so 
 in future. 
 
 And after the industries which the State or companies 
 of workmen are fitted to undertake have been acquired, 
 there will still be ample room for all the private enter- 
 prise that is available, especially having regard to the 
 probability that the greater freedom of democracy will 
 cause a still stronger effort to be made to raise the 
 universal standard of comfort, that consequently 
 demand will increase, and that production will be 
 correspondingly stimulated. 
 
 Thus the policy of the British nation in the future, 
 as in the past, is likely to be a judicious combination of 
 individualism, co-operation and socialism, with the 
 probability that the effect of the combination, in view 
 of the greater spirit of freedom and the greater know- 
 ledge which all the world will enjoy, will be a much 
 greater volume of production, accompanied by a much 
 higher level of consumption. 
 
 In brief the supremacy of democracy which will 
 result from the destruction of autocratic militarism 
 
INTRODUCTION xxiii 
 
 will not only render the peace of the world much more 
 secure than hitherto, but as soon as the period of 
 transition from war to peace, from autocracy to 
 democracy, is passed through, it will bring to the world a 
 degree of well-being that cannot be attained unless 
 men and women labour in an atmosphere of liberty, 
 with the energy of hope and the promptings of 
 affection. 
 
 George Paish. 
 
 yth November, 19 18. 
 
Chapter I 
 THE FALLACY OF MIDAS 
 
 (i.) 
 
 Once long ago there lived in Asia Minor, a king called 
 Midas, who formed an economic theory, and this 
 since he was a special favourite of the Immortals he was 
 permitted to carry into practice. Like many other 
 economic theories, it might have looked well enough 
 on paper ; but in execution it was a terrible fiasco. 
 According to the definition of wealth which this 
 ingenious monarch had proposed, it was gold alone 
 which counted, and according to that definition he 
 saw himself a made man. For he prayed that 
 everything might turn to gold under his touch 
 and his prayer being granted, he was well on the way 
 to become a millionaire (for a quite insignificant ex- 
 penditure of trouble), when to his dismay he found 
 himself on the border of starvation. Whatever he 
 drank, were it wine or water, turned into liquid 
 gold as it passed his lips ; if he tried to eat his teeth 
 grated upon an uncompromising lump of metal. There 
 was but one escape from his dilemma, and that was 
 by a reversal of the god's decree ; and had it not 
 been for the generosity of Olympus he would have 
 died from want like any pauper. His whole hypothesis 
 concerning wealth had broken down. 
 
 Mankind is slow to learn whether by precept or 
 example ; so the moral of Midas' misfortune was 
 largely lost upon the world. Centuries passed, 
 and in the course of history, his blunder was re- 
 peated, this time in a more western land, and not 
 
8 NEW FALLACIES OF MIDAS 
 
 by a king alone, but by a king's whole people. When 
 the voyages of Columbus and his successors revealed 
 to their countrymen the fabulous resources of 
 the new continent, the lust of gold caught them 
 in its grip, and in the years that followed the more 
 adventurous spirits among them were busy shipping 
 gold across the sea to the treasuries of Spain. 
 If gold was a true index of national prosperity then 
 Spain was prosperous ; her future semed assured. 
 Yet at this very moment her decline set in ; and not 
 all her hoarded wealth was sufficient to arrest the down- 
 ward movement. Were the England of to-morrow 
 to lose her maritime ascendency, or were she by political 
 blundering to alienate her great dominions, she would 
 yet retain some measure of her prosperity and im- 
 portance so long as her mines, her cotton mills and her 
 hard ware factories remained intact. Spain had no 
 such resources on which to draw ; and swiftly enough 
 she sank from her high estate into penurious degrada- 
 tion. She had built her hopes and spent her energies 
 upon a form of wealth which cannot feed the hungry 
 mouth, or clothe the naked body, a form of wealth 
 which, of its very nature, can never make a people 
 strong or wise or happy. 
 
 We to-day are little likely to fall victims to the 
 illusion which cheated Midas and ruined Spain. During 
 these last years of war we have learnt to dispense 
 with a gold currency ; our daily business has been 
 conducted with the aid of flimsy fragments of in- 
 diiferent paper ; and the veriest fool is now aware 
 that gold is no more than a convenient medium of 
 exchange. We may believe financiers when they tell 
 us that gold provides a "permanent standard of values"; 
 but we trouble our heads very little about such things 
 so long as the Government printing press is working 
 and public confidence is sustained. The figures of 
 great loans have taught us to think in ciphers and not 
 
THE FALLACY OF MIDAS 9 
 
 in coins ; we begin to realise something of the elements 
 of world finance, and the mysterious powers of credit. 
 Nobody now would gauge our national prosperity by 
 counting the bullion stored up in the national banks. 
 And if we cannot define precisely what we mean by 
 wealth, we can at least quote trade statistics, and 
 strike a balance between the total values of exported 
 and imported goods. Yet sooner or later (if we are 
 to think at all about such things), we must face the 
 question " What is wealth ? " and answer it if we can. 
 For the real cause of Midas' fiasco and Spain's disaster 
 lay not so much in their hurry to be rich, as in the 
 mistaken answer which they gave to this perplexing 
 question. We all need wealth and we spend the 
 greater part of our waking hours in the endeavour 
 to obtain it, but what precisely is this wealth we are 
 seeking we seldom trouble to enquire ; and most of us 
 would find it hard indeed to give a satisfactory answer. 
 Midas said gold ; but repented at leisure. Others 
 with higher wisdom might hazard a country house, 
 a shooting moor, a well-filled stable ; but that would 
 hardly meet the notions of a bibliophile or a native 
 from Honolulu. Tastes differ ; and any attempt to 
 pin all mankind to some such arbitrary choice, would 
 leave half the world as miserable as Midas. So we 
 had best seek to frame no concrete definition or 
 we shall be caught in some fallacy every whit as 
 blundering as his. 
 
 None the less, whatever wealth may be, we are 
 all agreed that wealth is what we need ; and so, I 
 suppose, it would be true to say that wealth is that 
 which satisfies our needs. Whatever ministers to our 
 bodies' wants, gives pleasure to our senses, food for 
 our minds, or comfort in our homes, all this is wealth ; 
 not the outward signs of material well-being only, 
 food and drink, houses and furniture, finery and 
 trinkets : but no less the view of a mountain side seen 
 
10 NEW I<ALLACIES OF MIDAS 
 
 from our windows, a sermon preached to us in church; 
 a song written to beguile our idle moments. The 
 nature of wealth varies from day to day, with the 
 variation of our tastes ; should ladies of fashion 
 discover next season some unexpected elegance in 
 mole skin muffs, the breeding of moles would become 
 a profitable business, and a mole-ridden meadow a 
 treasure rather than a nuisance. In short, anything 
 which men or women find useful and alluring, is a part 
 of wealth, and even though their desire for a thing 
 seems foolish or pernicious that is no reason for 
 ruling it off the list. If clothes are wealth because 
 they keep us warm and dry. Dreadnoughts and 
 howitzers are wealth also, because they protect us 
 from worse things than wind and rain. 
 
 (ii.) 
 
 Nor, when we come to consider the agents and 
 sources of our wealth, shall we omit from the count 
 those many things which in themselves are detestable, 
 or at least unpleasant, and which yet contribute in 
 some indirect manner to the satisfaction of our 
 wants ; such things for instance as mines for coal or 
 metal, goods trains, paper bags and the manufacture 
 of chemical manures. Nobody would desire any of 
 these for their own sakes ; but if I am to enjoy a 
 plate of porridge, every one of them will play its part, 
 great or small, in providing that trifling satisfaction. 
 Most important and most obvious of all is the contri- 
 bution of the soil itself. The earth is the original 
 purveyor of all our wealth ; and when we consider the 
 crops she grows, the animals she feeds, the metals and 
 chemicals which she contains, it is clear how little 
 there. is which we possess or enjoy but derives its 
 origin from her. 
 
THE FALLACY OF MIDAS ii 
 
 But for all these things, before we can enjoy them, 
 Nature demands a price, a toll ; and this too (though 
 here perhaps the gods were equally to blame) Midas 
 had forgotten. The earth is a niggard minister ; 
 she yields us what we ask, but ever since Adam and 
 Eve walked out of Eden, she has yielded it only on 
 one strict condition ; we must work for it. We must 
 sow, reap, dig, build, and win our livelihood gener- 
 ally by honest sweat. Metal a thousand feet below 
 earth's surface is no more wealth to us than the lost 
 mines of Solomon. It must be fetched from its hiding- 
 place, molten in a furnace, beaten into shape ; not till 
 then will it be valuable to man. As without the 
 sculptor's handiwork the marble block will be no 
 statue, so without labour the earth's resources cannot 
 become wealth. Man and nature have entered into 
 partnership to supply man's wants. Sometimes there 
 are cases when one or the other seems sleeping-partner 
 in the business. We may have blackberries, or (in 
 India) bananas, as a free gift ; or a man sings a song, 
 acts a play or delivers a lecture, and he may boast to 
 nature that he has satisfied his fellows and yet done 
 without her. Nevertheless, in however small degree, 
 the partnership still holds valid. The blackberry 
 must at least be picked ; the singer or lecturer must 
 use the voice which nature has given him. Nature's 
 part, in fine, we cannot cancel ; we can only endeavour 
 to control her. If rains fail or coal mines are ex- 
 hausted, we must accept the circumstance. We are 
 answerable for our part and for that only ; we endea- 
 vour to extract from nature what we can, and if 
 at this advanced stage of the world's history the 
 result falls short of our requirements, it is for us to say 
 whether we have played our part foolishly or wisely. 
 
, , Chapter II 
 
 WORK 
 
 (i-) 
 
 Man then accepts work first of all as a necessity of 
 his existence, not as a moral duty. This truth has 
 often been most strangely and wilfully forgotten. 
 There are many well-meaning persons going about 
 the world whose chief anxiety is to see that everyone 
 else is doing something. When trade is slack and 
 many hands are idle, those people talk about the 
 ** right to work " ; employment, they say, must some- 
 how be provided ; and they will push forward schemes 
 for the building of roads which nobody will ever use, 
 or the draining of fens which no farmer will ever till. 
 Such folk are always much scandalised at the miner 
 who works but four days out of seven ; not because 
 they want more coal, but because it gives them pain to 
 see a man thus unoccupied. They are scandalised 
 again when the engineers go on strike for shorter hours 
 though they themselves have never worked a 
 twelve-hour day in their life. At one time they may 
 be heard defending the indulgence of some private 
 luxury as being " good for trade, " because, that is, it 
 it gives somebody else a job to do ; at another they are 
 consoled for the accident of a broken window because 
 it gives employment to the plumber, as through the 
 plumber, good man, would not have been just as well 
 satisfied had they spared the pane and sent himhalf- 
 a crown by post. But that would never do ; these 
 good folk would feel there was a something lacking ; 
 they wished to see the man busy with his foot rule and 
 
 12 
 
WORK 
 
 13 
 
 daubing the putty with his thumbs. They have no 
 precise reason to give for wishing it ; they do not say 
 that it is good for a man to be active; for in that case, 
 they would first take the trouble to enquire how the 
 man's leisure hours are spent. But that at any rate is 
 not their argument. The idea that has captured their 
 minds is the far more venturesome hypothesis ; that 
 the plumber wants or should want to mend windows, 
 the miner to dig coal, and the engineer to manufacture 
 machinery, for the work's own sake, which is a very 
 different matter. 
 
 A Chinese writer tells the story of a tactful mandarin 
 who at the close of a long and honourable career, 
 retired to the borders of a lake, where he spent the re- 
 mainder of his days in angling for fish. For so skilled 
 a man his sport seemed singularly unproductive, 
 till one fine day it was discovered that he used 
 no hook at all upon his line ; for it was not, it seems, 
 his intention to catch fish. In China this may pass for 
 the wisdom of a philosopher ; but we should call it the 
 act of a fool. Here in Europe there is a strong presump- 
 tion that if men angle, they angle to catch fish, and upon 
 the same sound principle, they work, if they work at all, 
 in the expectation of reaping some return. Labour, in 
 other words, is a means to some end beyond itself. First 
 and foremost men work not because they want to, but 
 because they want something which work alone can 
 give. 
 
 Yet for all this, many men love their work ; it is some- 
 thing more than habit or sense of duty which keeps 
 them at their desk or at their bench long after the 
 actual necessity for work is gone. The truth is that 
 the love of activity, the desire to be up and doing 
 is far stronger in our nature than the love of ease and 
 leisure. Between the alternatives of action and In- 
 action few would hesitate in their choice ; least of all 
 those who have experienced the tedium of an idle 
 
14 NEW FALLACIES OF MIDAS 
 
 life. In a recent book, entitled " the Great Society," 
 Mr. Graham Wallas has recorded the various answers 
 given by a number of girls and women to whom was put 
 the question, whether work brought them happiness. 
 Almost without exception they asserted that it did, 
 and the reason in every case was laid upon the misery 
 of a purposeless existence. " It is so lonesome at 
 home." " At work I am always happy ; " *' it leaves 
 me no time to think ; " or " it is nice to feel you are 
 some use." All their answers were in the same strain. 
 Yet by a curious contrast the verdict of the men to 
 whom a similar question had been put, was equally 
 decisive, but in the opposite direction. " Questioned 
 with regard to pleasure in work, engineers say it is 
 all toil. They admit there is a certain pleasure in 
 a job well done ; but they say bad conditions knock 
 the pleasure out. Coal miners generally say the work 
 is all toil, but one man said he would sooner be at work 
 than idle ; another that he can take pleasure in the 
 work for half a day when he knows he is going to have 
 a half-holiday. A third said that there is a certain pleas- 
 ure in digging out coal, when you have a good place ; 
 but that pleasure is just in the expectation of making 
 a good wage. Factory workers {i.e. , textile, bootmaking, 
 etc.) agreed that work is all toil." There is only one 
 exception, " Ashby, our agricultural labourer, is very 
 emphatic with regard to the pleasure to be obtained 
 from agricultural work." At first sight the contrast 
 may appear puzzling ; but the explanation is not, I 
 fancy, far to seek. The men spoke as never having 
 known what it was to lead an idle life. The cause 
 of their dissatisfaction lay, not in a dislike of work, 
 but in a distaste for the particular kinds of work which 
 circumstances compelled them to perform. A doctor, 
 a scientist, or a teacher would have a different tale 
 to tell. These do win happiness through their work, 
 because they find in it a means of self-expression. 
 
WORK 15 
 
 There is a vital energy in man which craves an outlet, 
 ideas, emotions, inspirations, which demand to be 
 translated into action ; and we must believe (unless 
 we are to despair of human nature) that every man, 
 however indolent or stupid, has some hidden talent, 
 some innate capacity which it gives him pleasure to 
 employ. One, may be, is ready with his hands, and 
 longs to gratify the instincts of a craftsman ; another 
 has a taste for the sea, and delights in the navigation 
 of a boat ; a third loves flowers and finds happiness 
 in growing them. To these their several occupations 
 echo in some real sense the inner workings of their 
 personality. But the trouble is not so much that 
 the wrong men find their way into the wrong pro- 
 fessions, but rather that the great majority of trades 
 afford men no such opportunity of realising their true 
 selves. Most of the talk about the ''blessedness" 
 of manual labour is sheer cant ; if those who use that 
 phrase were to spend twelve months in digging coal, 
 or laying bricks, or ploughing up the soil, they would 
 soon realise that in such tasks of unrelieved monotony 
 there is small satisfaction to the soul of man. Ten 
 hours of hoeing in a field of turnips may be good moral 
 discipline, but discipline implies preparation for some 
 further and higher purpose. Soldiers are drilled 
 that they may keep their ranks when the day of battle 
 comes ; but the realisation of the soldier's self comes 
 not in the drill, but in the victory. So the drudgery 
 which turns human beings into unintelligent machines, 
 is not what human beings themselves desire, or should 
 desire. The Greeks, who understood life better perhaps 
 than most modern people, were quite clear upon the 
 point. Aristotle held that no man had attained the 
 full measure of his human birth-right who spent three- 
 quarters of his day and all his energies upon purely 
 manual labour. In the past the life-work of more 
 than half the world's inhabitants has been as soulless 
 
i6 NEW FALLACIES OF MIDAS 
 
 as the labour of a well-kept horse. Even to-day how 
 much of human toil is still mere drudgery, death to 
 the spirit and weariness to the flesh. Man has hitherto 
 endured the yoke, not because he loves such toil, 
 but because he is under compulsion to secure his 
 daily bread. And therefore throughout the ages, it 
 has been his constant effort, as it still is, to mitigate 
 the severity of his necessary toil. 
 
 (ii.) 
 
 Man differs from the rest of the members of the 
 animal kingdom in this, that while their destiny is 
 shaped by something other than their individual choice, 
 he, being master of his fate, discerns the alternative 
 courses which lie before him and chooses. 
 
 Some animals are by nature idle ; the cow does 
 nothing for its fodder : but lives by browsing. Others, 
 like the bee, work with a restless industry which kills 
 them in a month. The two types are poles asunder, 
 with not a point in common ; yet here is a man setting 
 out with a fine audacity to emulate them both. Want 
 heads him every way ; to satisfy his needs he must 
 toil like the bee ; but then toil is painful; he is in 
 no hurry to be dead ; there is much to be said for the 
 cow's life after all. What a cruel dilemma lay thus 
 before primitive man ! Fortunately he was muddle- 
 headed from the outset ; and he never sat down to 
 think it out. If he had, he would be sitting there still, 
 and where would be the solution ? But man, little 
 knowing how or why, works out his destiny at the 
 last. .^ 
 
 Consider the life, " nasty, brutish and short," which 
 he led in the dark and painful ages of his infancy, 
 stalking his quarry with a brittle flint, hoeing up the 
 sods for his miserable corn crop with the beak of a 
 
WORK _ 17 
 
 broken bough, grinding the grain between two boulders, 
 and then, as like as not, going hungry to bed, because 
 the rain put out his fire. The wonder is that he should 
 have survived at all. For to make matters worse 
 he bred and multiplied exceedingly, and just when it 
 seemed to call for a miracle to provide food for all the 
 mouths, the miracle actually did happen. For there 
 broke on his dull brain the magic of invention. Some 
 bright spirit, — Tubal Cain is the name which legend 
 gave him — was one day discovered turning up his 
 fallow with a preposterous implement to which he had 
 actually harnessed the elder and stronger members 
 of his family. I have little doubt that his neighbours 
 called him ugly names, said that this was an improper 
 use of children, and that it was worse than useless to 
 plough the soil so deep, and generally prophesied 
 disaster. None the less his crop succeeded ; he had 
 broken four acres to his neighbour's two, and ear for 
 ear his yield was twice as heavy. After that inventions 
 followed thick and fast ; first came wheeled carts, 
 saving an infinity of trouble ; then boats for the 
 navigation of seas and rivers ; more wonderful still 
 machines which would turn yarn into cloth with twenty 
 times the speed of the most skilful hand weaver. By 
 the time all this was accomplished, it might be thought 
 that man would have been contented with his lot ; 
 for food of a sort was now plentiful ; his labour was 
 lighter ; and the animals had long ere this been made 
 his slaves and upon them were foisted the least attrac- 
 tive of his tasks ; he might well let invention be ; but 
 not a bit of it ; he went one better and proceeded to 
 harness, as they say, the elements. Fire, water, 
 electricity (we have reached our grandfathers' time 
 by now) were each in turn summoned in to p ay ; 
 and he can boast to-day of engines and machineries 
 so powerful and efficient that one man at a lever 
 can perform the function of ten, twenty, or a hundred 
 
i8 NEW FALLACIES OF MIDAS 
 
 hands ; from which it may be seen that though 
 thinking may not add one cubit to our stature, it can 
 multiply our food and drink a thousand fold. 
 
 Thus man by the use of his native wit has succeeded 
 beyond belief ; mechanical invention and scientific 
 study of the earth's resources had performed a miracle 
 of progress ; yet even this would have been impossible 
 but for one other and most important principle of 
 method. Organisation is the main-spring of all success. 
 Just as victories do not fall to a rabble, and a nation 
 at war must organise, so man might exhaust all his 
 ingenuity and lay his schemes never so wisely, but 
 hardly a step of progress could he make without the 
 disciplined co-operation of his fellows. 
 
 There was once a time (though it is so long ago that 
 I daresay historians would deny it ; ) when every man 
 was jack of all trades ; he raised his own corn, baked 
 his own bread, manufactured his own implements, and 
 was, in a word, his own butcher and baker and candle- 
 stick maker, as well as his own police constable. We 
 may be sure that he was an indifferent performer 
 at such a variety of jobs ; and the mere -time he wasted 
 in passing from one to the other was lamentable. But 
 it was not so long before he discovered a better way. 
 Were he himself to give his whole day to raising of 
 the corn, while another man's business was to grind 
 it, a third to bake it into loaves, and a forth to distribute 
 these among the neighbours, what an ecomony of time 
 and what an increase of skill would result all round. 
 So each individual undertook to drive a separate trade, 
 and specialisation became the order of the day. Ever 
 since then this principle has developed more and more, 
 until to-day even the simplest article of use is the work 
 not of a single craftsman but of many. Half-a-score 
 of processes for example, have gone to the making of 
 this book ; one man set up the type, a second put 
 it through the press, a third prepared the cover-lids, a 
 
WORK 19 
 
 fourth pasted them together at the back, a fifth 
 stamped the title, a sixth; sheared the leaves ; — and, 
 in short, all that Caxton and his apprentice performed 
 with two pairs of hands, now engages an army of 
 workers. The result is that where the Westminster 
 Press turned out a single book the modern publishing 
 house can turn out a thousand ; and publication is 
 so cheap that the deluge of printed matter is nothing 
 short of a general nuisance. It is the same with every 
 trade. Specialised labour is an art we have learned 
 perhaps only too well, but though the clothes, pictures, 
 furniture, crockery and wall-papers which our great 
 factories shower upon us, are inartistic sorry stuff, 
 they are at least both plentiful and cheap. 
 
 It is a far cry from the ample conveniences of modern 
 life back to the naked destitution of our forefathers. 
 Thousands of years have passed since they faced the 
 grim alternative of grinding drudgery or sure starvation. 
 To say that their dilemma has been solved is perhaps 
 to say too much. The masses are still discontented 
 with their lot, and heaven knows there is little remission 
 from their toil. But there are those who claim that the 
 solution lies already in our power, did we but care to 
 grasp it. They tell us that we have only to abolish 
 property, tax the land, nationalise the railways, 
 adopt a tariff, or apply once and for all some grand 
 heroic remedy and the millenium will be here to-morrow. 
 I doubt if it is as near as that, or whether, when it 
 comes, it will be by such means as these ; but it is 
 something surely that such a hope is even whispered. 
 We may not yet have reached the goal ; but let us at 
 least recognise what a distance we have travelled. 
 
 Man's first aim, as we said, was the satisfaction of his 
 wants. How far has he achieved that ? He began 
 life in a beggarly fashion, scarcely able to keep body 
 and soul together. Now, even the poorest are able to 
 feed, house and clothe themselves and find, perhaps. 
 
20 NEW FALLACIES OF MIDAS 
 
 a trifle over to send the children to the picture palace. 
 The greatest change of all has come during the last 
 hundred years : and though there is no need here to 
 institute a statistical comparison, or estimate the scale 
 of wages, the price of comforts, or the purchasing 
 power of money in 1817 and 1917, yet it is worth while 
 to set down a story told of a country labourer just a 
 century ago. When he was already an old man, he 
 was asked, as a point of interest, to recall what had been 
 the most memorable treat in his long, but uneventful 
 life. His reply must have come as a shock even in 
 those days ; else it would hardly have been recorded. 
 He could recollect, he said, having enjoyed no greater 
 pleasure, taking all in all, than when by a rich neigh- 
 bour's bounty he made a meal off a cold rice pudding. 
 Such an answer is simply unthinkable to-day. 
 
 Man's second aim or desire, as we have seen, was to 
 reduce the severity of his daily toil. How far he has 
 succeeded, is difficult to compute, the conditions of 
 industry have so changed and there is so wide a 
 difference between the labour of the mediaeval peasant, 
 and the labour of the modern factory hand. There 
 are still no doubt many trades which require a great 
 out-put of physical strength. Nevertheless, upon the 
 whole, the advent of machinery has in a very high 
 degree lightened the burden of labourers. The best 
 proof of this lies in the fact that during the war women 
 have been able to take men's places in the factories 
 and (what is more) have maintained the output of 
 production at a rate but slightly lower than in preceding 
 years.* Labour to-day demands perhaps more con- 
 centrated energy than in the past ; yet that concen- 
 tration is itself a step nearer the goal. It may be 
 that the primitive man was a bad time-keeper, and I 
 daresay that the Anglo Saxon labourer idled behind 
 his master's back, but I wonder what either of them 
 
 * In many cases even higher. 
 
WORK 21 
 
 would have thought had he heard men seriously pro- 
 posing the introduction of an eight hour day. 
 
 The world is not perfect yet ; many work too hard 
 and go too short ; but the great change has begun ; 
 and labour to-day claims shorter hours, entails less 
 physical exhaustion, yet at the same time is infinitely 
 more productive than the wisest prophet could ever 
 have foretold. 
 
 Yet it is not to be thought that the march of civilisa- 
 tion is a sort of Rake's progress, and that as life 
 becomes easier and pleasanter for man, he must needs 
 fall into careless, idle ways ; far otherwise. His vigour 
 is not diminished by the increase of his powers. The 
 better trained his mind, the greater his capacity for 
 work ; and as work becomes more complex, it calls 
 for a more concentrated and effective energy. The 
 performance of modern music (to take one striking 
 instance) demands an exercise of mind and body, 
 such as no mediaeval minstrel ever dreamt of. The 
 modern craftsman may work short hours ; but during 
 those hours his whole energy and attention are set upon 
 his task, nor is even his leisure wasted after the manner 
 of the agricultural labourer, whose favourite relaxation 
 is a complete vacancy of mind. The world, in short, 
 will be found more alert to-day, more ambitious and 
 (if you will) more restless than ever it was before. 
 Our life is crowded with incident and variety of 
 occupation ; and if reformers clamour for a reduction 
 of working hours, it is not a sign that the race has 
 become lethargic or enfeebled. Rather it points to 
 a fuller and higher conception of life's purpose, and 
 reminds us that there exist other activities than the 
 winning of daily bread. For, in a sense, all activity 
 is work. The reading of a book which kindles ideas 
 or informs the mind is work ; talk which sets the brain 
 thinking is a more worthy use of time than hoeing 
 turnips. So what we need to consider is not how much 
 
32 NEW FALLACIES OF MIDAS 
 
 or how little work we ought to do, but the quality of 
 what is done. And above all, let us remember that it 
 is the motive that determines what the quality will 
 be. Even the highest forms of work may seem mere 
 drudgery when the right spirit is wanting : but the 
 meanest task performed for an ideal is changed from a 
 burdensome necessity and becomes an inspiration 
 and a joy. 
 
 But, though I suppose every thinker from Aristotle 
 downward has agreed in ranking the mental activities 
 as higher and more desirable than activities of the body, 
 yet we must not fall into the error of depreciating 
 physical labour. It is not necessary merely, but 
 wholesome too. We consider a man who never uses 
 his brain, to be little better than a brute ; but the 
 opposite extreme is equally undesirable ; and there 
 is something almost inhuman about the man who 
 forgets the existence of his body. The intellectual and 
 sedentary life requires some antidote. It matters but 
 little wherein that antidote is found ; whether in 
 sport and active recreation, in the exercise of art and 
 craftmanship, or even, (where Ruskin once seriously 
 set out to find it) in the more strenuous exercise of 
 stone-breaking. What seems of more importance is 
 that leisure should mean for us all not activity merely, 
 but activity in some sense complementary to our pro- 
 fessional work. Even so in this dualism of occupation 
 a genuine difficulty seems to arise. I mean that for the 
 majority of men to-day life is, as it were, divided into 
 two compartments, the time during which they work 
 with an object, and the time which they waste for 
 want of one. So they come to regard leisure as a mere 
 cessation of activity, or at best as an activity that has 
 no purpose. If, as is probable, the future development 
 of civilisation makes bread-winning more easy, and 
 reduces still further our daily task of necessary work, 
 the problem will be even more acute. The time may 
 
WORK 23 
 
 come when a six hour working day will be the rule ; and 
 then we shall be even more at a loss to utilise a leisure 
 thus enlarged. A real need will be felt for a motive 
 which will give a fresh unity to life and enable 
 a man to feel that all his activities are directed 
 to one purpose and not two. That motive cannot 
 be a merely sefish motive ; for the longer are the 
 hours of leisure, the more inadequate will mere 
 amusement be to fill them. So men will naturally be 
 driven to devote more of their spare time to acts of 
 useful service. Each in his own way will contribute 
 something towards making life more pleasant, more 
 enlightened and more beautiful for his fellowmen ; 
 and in so doing he will find more contentment than in 
 his wasted hours.* And, since this motive of service is 
 also the motive by which all true and honest work is 
 inspired, we shall find in it the very unity of purpose 
 which we have sought. Nor is it strange that such an 
 ideal alone should satisfy ; for alone it is able to give 
 to the scattered incidents of life a clear connected 
 meaning. It is not like that spurious religion which 
 begins at the Church door and is forgotten from Monday 
 morning till Saturday night. It embraces the whole of 
 man's activities, and passes with him from the toil 
 and sweat of the workshop into the pastimes and 
 amenities of life. 
 
 * If this statement seems to strike too high a moral note, it is only 
 necessary to refer to the Boy Scout movement for support of it. Boys 
 are happier doing a '' good turn " to a neighbour or improving the 
 eflficiency of the troop than they ever were when idling at street-corners 
 or attending the local cinema. 
 
CHAPTER III 
 
 CAPITAL 
 
 Living as we do in an age which the triumphs of human 
 skill and ingenuity seems to have set upon a plane 
 immeasurably higher than all the civilisations of the 
 past, there is little wonder that the modern world 
 has begun to have a fine conceit of its own wisdom. 
 Seeing Science thus miraculously exploited, Nature 
 already mastered and pressed into our service, a 
 prosperity more widely extended and a civilisation 
 more progressive than ever was before, we conclude 
 that we are a little better, or a least a good deal wiser 
 than the fathers who begat us. And so, like the 
 thankless heirs of some great inheritance we over-look 
 or underrate the debt which we owe to the patient toil 
 of the scientists, chemists, and mechanical inventors 
 of the previous century and even of those forgotten 
 pioneers who first devised the axe-head and the plough. 
 When we boast of the triumphs of modern progress 
 and plume ourselves on the giant strides we are making, 
 we should in very justice recollect that it is often 
 the first faltering steps which count the most. 
 
 But it is not only to the more brilliant spirits of 
 discovery and invention that we are debtors. The 
 great host of unnamed workers who tilled our fields 
 and set up our homes, dug our mines and bridged 
 our rivers, have also a claim upon our gratitude. It is 
 to them we owe, in part at least, the vast hoard of 
 accumulated wealth which every generation be- 
 queathed to its successor. They, like thrifty parents, 
 built up the capital, of which we, their sons and heirs, 
 enjoy the interest. 
 
 24 
 
CAPITAL 25 
 
 Capital is a word with a falsely financial sound about 
 it. Too often we speak of it, as though it were a 
 matter of bank-notes or dollars or pounds sterling, a 
 mere parcel of stocks and shares, or a deposit at the 
 bank. But these are only the tokens and arithmetical 
 symbols of capital. For capital itself may take a 
 thousand or ten thousand forms. 
 
 The short parable which follows will make my 
 meaning clear. 
 
 Not many years ago, Mr. Pennywise, the well- 
 known print collector, who then lived in a villa at 
 Ealing, and worked in the city as a clerk, having saved 
 a couple of hundred pounds, invested the whole of 
 that sum in Mexican Railways — a transaction calcu- 
 lated, as he thought, to bring in due course a welcome 
 addition to his income. He flattered himself vastly 
 on this wise disposition of his savings and entertained 
 a secret contempt for an improvident neighbour 
 who had expended a similar sum upon the purchase 
 of a car. The railway dividends, when they arrived, 
 exactly covered the cost of a second class season ticket 
 to town where his business then took him every week- 
 day of the six. His neighbour on the other hand, who 
 had been previously accustomed to travel with him in a 
 third-class carriage, now preferred to make the journey 
 in a car. Both men were well-satisfied with this 
 change in their daily habits, and with the use to which 
 their capital was put, but as events proved the owner 
 of the car still continued to enjoy the luxury of his 
 morning and evening drive long after the calamitous 
 outbreak of civil war in Mexico and the subsequent 
 collapse of Mexican Railroad stock. During the next 
 year and for many years which followed, the Mexican 
 investment paid no dividend at all, and this disaster 
 so changed the financial preconceptions of Mr. Penny- 
 wise that he resolved to employ his future savings 
 in the purchase of old prints, in which, as it chanced, 
 
26 NEW FALLACIES OF MIDAS 
 
 he had an excellent taste, and from which he derived 
 a satisfaction that was not merely highly genteel, 
 but perfectly secure against the accidents of revolution 
 or finance. 
 
 Thus do men employ their capital, some this way 
 and some that. In essence, capital never consists 
 in money, but in such things as railroads, motor-cars 
 and prints. When Mr. Pennywise lost his dividend, 
 each morning still brought his neighbour a not in- 
 adequate return for his investment, in his daily ride 
 to town ; and long after the car was on the dust heap, 
 Mr. Pennywise continued to enjoy the contemplation 
 of his prints. And last year, when his collection was 
 sold at Christie's the proceeds of the sale established 
 his widow and sorrowing family in a secure and com- 
 fortable fortune. Capital is wealth saved, and not 
 consumed wealth : Wealth consumed gives satisfaction 
 to our wants, but wealth saved is the means to the pro- 
 duction of more wealth. * Let us take an illustration 
 more obvious and simple than the cases hitherto 
 disscussed. The first rude axe made by palaeolithic 
 man was capital to him. Its manufacture arose, 
 as we may guess, from his having more corn than he 
 could eat. The harvest was for once unusually pro- 
 ductive, and he had enough to last him for two suc- 
 cessive years. So when seed time came round, it did not 
 
 * The purchase of a motor-car might at first sight be reckoned as 
 spending or consumption of wealth rather than saving it. On second 
 thoughts however, it will be seen that whatever vehicle enables a man 
 to reach town more quickly and there to spend his whole day upon 
 productive activity, has as much right to be classed under capital as 
 any other article which assists him in the business of production ; for 
 instance the railway truck which brings coal to his office or the telegraph 
 wire which provides him with commercial information. Indeed nothing 
 is more difficult in practice than to draw a line between consumption 
 and investment. Very often they are simply relative terms. Expendi- 
 ture, which is consumption relatively to what a man has already earned, 
 may very well be investment relatively to that which he may by its 
 means be able to earn or produce hereafter. Even in the eating of a 
 loaf of bread this twofold aspect is present. 
 
CAPITAL 27 
 
 find him in the field. He was up in the mountains 
 chipping at a flint. This was a lengthy business ; 
 but when at last the axe was made, he took it out into 
 the forest and felled a tree out of which he fashioned 
 a strange, but not ineffective implement for breaking 
 up the soil ; and when seed time came round a second 
 time, he was better armed than ever before. He soon 
 discovered that his year's work had brought him a two- 
 fold benefit ; first he was able to break up a double 
 acreage of land producing at least a double quantity 
 of corn ; and secondly he was able to break it with 
 half the expenditure of strength. His new tools were 
 a permanent aid in the production of fresh^wealth, and 
 from them he derived a recurrent benefit — and not he 
 alone but his sons and his sons' sons after him. His 
 axe and spade perished, or were discarded ; but 
 other and better implements took their place. And 
 so by slow degrees the world became immeasurably 
 richer, being stocked by centuries of labour. We, the 
 heirs of those who have gone before, live in houses we 
 did not build, draw water from cisterns we did not 
 dig, and eat the fruit of vineyards and orchards which 
 others planted long before our time. Implements of 
 a thousand kinds, machinery, mines, railroads, ships, 
 harbours, and whatever else we inherit, these are the 
 things the possession of which makes life so easy for 
 us, and the lack of which would make it at once so 
 difficult. They are the world's capital. 
 
 All capital comes from a surplus. By the nature 
 of things man is constantly consuming what he pro- 
 duces ; and if his consumption keeps even pace with 
 his production, no progress can be made. Somehow 
 or other he must get ahead of his consumption, pay his 
 way in advance, steal, as it were, a march on time. The 
 opportunity may come to him in one of three different 
 ways — it may come by working harder, as the stone- 
 age man might have made his axe by sitting up at 
 
28 NEW FALLACIES OF MIDAS 
 
 nights. It may come by working more intelligently, 
 as when man first learnt to manure the soil and so 
 increase its yield. Or lastly it may come by a stroke 
 of fortune, an abnormal harvest, a lucky vein of ore, 
 a discovery of some new property in nature. It matters 
 little however how the surplus comes, what matters 
 much is how the surplus shall be used. If, because the 
 granary is full the farmer neglects his field, and like 
 the rich fool in the parable, turns to indolent consump- 
 tion, in due course the granary will be emptied and 
 matters stand just where they were before. Even the 
 man who hid his talent in the napkin acted more 
 prudently than that. Yet a surplus resting idle and 
 not put to proper use is capital in no true sense. For 
 it is the essence of capital that it should breed fresh 
 wealth, and secure to man some present advantage 
 or profit. Whether the surplus sets him free to make 
 a spade, weave a cloak or build a house, the issue is 
 the same. For in each case his future equipment 
 will be more complete as he goes about his business. 
 With a cloak on his back he can brave any weather, 
 he can dig his field quicker with a spade in his hand, 
 he will sleep sounder and wake fresher with a roof 
 over his head. In short, he will be not only a happier, 
 but a more useful, more efiicient and more productive 
 man. His surplus has not been used as an oppor- 
 tunity for some momentary excess, a barren tempta- 
 tion to a superfluous meal or an idle holiday. It has 
 turned to an interest-paying investment ; and in the 
 long run it will be found as it was in the fairy tale 
 that the golden eggs are far more valuable than the 
 flesh of the goose herself which lays them. 
 
 In practice, it is true, the use of capital is a more 
 complicated matter. Now-a-days a man does not 
 turn aside to labour in some new direction because his 
 ordinary labour has brought him a surplus above his 
 normal needs. He invests what he can save in a 
 
CAPITAL 29 
 
 company or business, or lends it to a bank which does 
 this for him. Yet the transaction is virtually 
 the same. If he buys shares in a cotton mill, he 
 becomes owner or part owner of a machine which makes 
 handkerchiefs for other men ; and these other men will 
 give him money for the same wherewith to satisfy 
 his own needs. Even when capital is counted in 
 millions, and finance is one vast game of I.O.U's there 
 is still no difference. When men speak for instance 
 of the nation's capital, it is not of hoarded gold that they 
 are thinking, but of our coal mines and iron foundries, 
 our docks and steam-boats and ship-canals, our rail- 
 roads and factories, not in England only but built by 
 English enterprise and by English savings in every 
 quarter of the globe. These, like the primitive axe- 
 head, are simply the results of a surplus well and wisely 
 used. Capital and interest are but new names for 
 things which have existed since the world began. 
 
 And since the world has been going for a good while 
 now, the bulk of its capital has steadily and prodigi- 
 ously increased until the very face of nature has been 
 transformed by the handiwork of man. Capital is all 
 around us, not only in the roads by which we travel 
 but in the lamps which light them up at night, not only 
 in the dams which keep our rivers from flooding out 
 the valleys, but in the pleasure-boats which cruise upon 
 them. In a word, it is the whole paraphernalia of 
 civilised existence. In every trivial daily act we needs 
 must use this accumulated product of man's toil both 
 past and present ; and we have come so to rely upon its 
 use that if it were suddenly taken from us we should 
 be plunged back into those dark and helpless ages 
 when mankind lived and fed like beasts, when to sleep 
 was to sleep under the stars, when to travel was to 
 go afoot ; when each depended for his very survival 
 upon brute strength, tough teeth and nimble fingers. 
 These at least man still controls whatever catastrophe 
 
30 NEW FALLACIES OF MIDAS 
 
 befalls him — and when all his capital is gone even the 
 bankrupt can conimand the price of his bod5^'s labour. 
 For us, then, who owe so great a debt to those who 
 have gone before, there remains a corresponding duty. 
 It is not for us to spend where they have spared ; nor 
 is it enough to leave things simply as we found 
 them. Both for ourselves and for those that will 
 come after us, we must (if progress is to continue) 
 accumulate still vaster capital, and put it, if possible, 
 to still better use. Thrift in the years before the war 
 was not a fashionable virtue, and even now, supposing 
 the lesson of saving to have been learnt, we need to 
 study more carefully the disposition of our savings. 
 This is perhaps the crucial question, for the possibilities 
 are legion. To invest our spare cash, like Mr. Penny- 
 wise, in prints, may well prove a profitable deal ; 
 but aesthetic pleasure, however admirable in itself, 
 does nothing whatever to satisfy the more pressing 
 needs of man. Even the possession of a motor car, 
 while adding to its owner's comfort and perhaps in 
 some small degree to his efficiency, does not very 
 materially contribute to that larger end. The Mexican 
 rail-road on the other hand, though it turned out to 
 be a temporary failure, must have added considerably 
 to the world's supply of food. It encouraged settlers 
 to open up new country, brought them implements 
 or whatever else they needed, and then in turn brought 
 back to others the products of their labour. In the 
 use and investment of our capital, it is a real duty to 
 consider not only the return which it will bring to our 
 own pockets, but the service which it may perform to 
 mankind at large. Capital, which merely ministers to 
 the comfort or luxury of men, is less serviceable 
 than that which provides them with the necessities 
 of life ; and so long as the more pressing needs re- 
 main unsatisfied theirs is a prior claim. Yet, 
 while we endeavour to improve and multiply the agents 
 
CAPITAL 31 
 
 of production, there is one agent which it is of 
 first importance that we should not forget. We must 
 never omit to foster that human capital (if so it may 
 be called) which consists in the physical powers and 
 mental efhciency of man himself. It is far better to 
 build up a healthy, and keen-witted race than to erect 
 an extra factory or mill. For machinery may be 
 bought at too dear a price, if the ecomony which buys 
 it starves the strength and vigour of men who work 
 it. So it is obvious that the conservation of this 
 human capital must take precedence of all the rest, and 
 yet this is a truth which has too often been forgotten 
 both by individuals and by peoples. The French 
 nation is noted as a model of thrift ; the savings of 
 French workers are invested in every continent ; 
 yet (as some think) their economy has resulted in 
 a standard of living which is too low for maximum 
 efficiency ; and it may well be that this passion for 
 thrift is one among other causes of a declining birth- 
 rate. The same mistake has, in the past at least, 
 been only too prevalent among English manufacturers, 
 who were often more concerned with building up their 
 business and providing new machinery than with 
 paying their employees a wage sufficient for their 
 wants ; the natural result has been that the workers' 
 health has been sapped by insufficient nourishment ; 
 and so what the out-put of the factories gained by im- 
 proved mechanical efficiency was lost again by the 
 incapacity of the workers to perform their best work. 
 It is clear that to strike a proper balance between 
 consumption of income and economy of income is 
 never an easy matter ; but before all it is necessary 
 to realise that we have not here to deal with two 
 alternatives, which are mutually opposed, but with 
 two courses leading to a single goal ; which, is by 
 whatever means, to achieve the most complete and 
 permanent satisfaction of all human needs. 
 
CHAPTER IV 
 
 THE PARADOX OF PROGRESS 
 
 Nothing seems easier in theory than to prophesy 
 milleniums. For ten thousand years man has toiled 
 with tireless patience ; he has developed vast resources ; 
 he has devised new and efficient methods of production ; 
 and the time must surely be coming when he will 
 reap the due reward of all his industry and thrift. 
 In old age the individual labourer counts upon ceasing 
 from his toil and enjoying his well-earned respite ; 
 and when campaigning days are over, the veteran 
 obtains his full discharge. Is there then for the human 
 race at large no ultimate period of emancipation 
 from the uncongenial drudgery of bread-winning ? 
 Surely we may look forward to some distant day 
 when the whole business of providing food and drink 
 may be left to mere machines, and life may be given 
 wholly to higher and worthier activities. 
 
 Yet when we cease to dream of what might be, 
 and face the facts which are, we must recognise how 
 little sign there is as yet of that day coming. For what 
 do we see around us ? It is certainly no Utopian 
 universe — the manhood of whole cities confined in 
 stuffy offices and bending from high stools over the 
 calculation of innumerable ciphers, the populations 
 of broad counties spending their days in subterranean 
 caverns intent upon their grimy mole-like business, 
 the health of our women wasted amid the dust and 
 rattle of unwholesome factory sheds, our men's vigour 
 sapped before the scorching breath of furnace fires, 
 our children taken from school and set to earn their 
 
 32 
 
THE PARADOX OF PROGRESS 33 
 
 living at fourteen years of age. Every day competition 
 seems to grow tenser and more bitter. The more 
 trade thrives, the heavier seems the demand upon our 
 workers ; and, as the world grows rich, the more 
 conscious does it become of the poverty of millions. 
 Fate seems to have cheated us, as Laban cheated 
 Jacob, and just when we look to receive our promised 
 recompense, a fresh term is added to our labours. 
 
 In all this, if there lies no fault of ours which we can 
 remedy, there is at least a puzzle to which we must 
 find an answer. 
 
 Dean Swift professed to find one, when he wrote 
 his " Modest Proposal " for utilising the children of 
 poor people in Ireland. What was wrong with the 
 world, as he saw it, was simply that there were too 
 many people in it. We suffer from overcrowding, 
 and the remedy which he suggested was nothing less 
 than to make away with superfluous babies and use 
 them as food for the table. What Swift wrote in 
 irony, has been maintained by others in grim earnest. 
 Some like Malthus, though they would perhaps draw 
 the line at the cannibal feast, are convinced that the 
 only hope for the ship of state is to jettison some ot 
 its crew. Others, though they have no stomach for 
 the remedy, make no doubt of the disease, and exult 
 in the fact that birth-rates are falling among the more 
 civilised nations. And on the face of it, the argument 
 is specious enough. Mankind has multiplied at an 
 amazing rate. The population of Great Britain has 
 more than doubled in a century. That of Russia 
 increases by four millions every year. When there 
 are so many fresh mouths to fill, it seems inevitable 
 that someone must go short ; and, if there is a short- 
 age, the natural consequence is a desperate struggle 
 to survive. In short, while the old quarrel between 
 man and nature is beginning to be settled, the war 
 bewfeen man and man is increasing in violence. 
 
34 NEW FALLACIES OF MIDAS 
 
 This sad and hopeless theory is happily mere moon- 
 shine. For the world is not within a thousand years 
 of being overcrowded. That there are still huge 
 tracts of country almost empty, is obvious enough ; 
 in Russia a square mile supports a population of twenty- 
 three persons, while in a prosperous land like Belgium 
 the average was formerly 625. The real question is 
 whether the resources of the country are adequate 
 to support the increased population. Now, if science 
 has taught us one thing more than another, it is that 
 we know very little indeed of the wealth which still 
 lies hidden in the earth. It is an unfathomed reservoir 
 of which hitherto we have but skimmed the surface. 
 Not a year passes, but it brings to light new products 
 and properties undreamt of. Men have been farming 
 for several thousands of years ; and yet how little 
 do they understand their business. English cornfields 
 for example produced, before the war, about one fifth 
 of the grain which we consume. Yet we are told on 
 the best authority that by making a clean sweep 
 of our old-fashioned appliances and slow conservative 
 methods, and by adopting a strictly scientific agriculture 
 like the Danes, we might raise more than a half, perhaps 
 three quarters, possibly even the whole of what we 
 need. If this seems near to the miraculous, science has 
 many such miracles in store. Long before our coal 
 fields are exhausted, we may be certain that some 
 substitute for coal will be discovered ; and until the 
 resources of the earth have been fully and scientifically 
 exploited, the growth of population need have no 
 special terrors for economists.* 
 
 * In point of fact, there is a law, already proven in many European 
 countries, that as the standard of civilisation is advanced, the rate of 
 increase declines. The increase of population in Great Britain is now 
 less than one per cent., in France there is a positive decrease. This is 
 due in part no doubt, to the selfishness of individuals, but far more to 
 the self-restraint of parents who prefer to bring up a small family in 
 decent comfort and with a proper start in life, rather than to increase 
 the number of their children to the prejudice of their future happiness 
 and efficiency. 
 
THE PARADOX OF PROGRESS 35 
 
 Indeed the argument might very well be all the 
 other way. England could hardly be so rich to-day, 
 if her population were no greater than it was a century 
 ago ; for our coal-fields and our iron-mines could never 
 have been exploited. The truth is that there is a 
 positive advantage in numbers, if proper use is made 
 of them. A battalion in which every member's part 
 is regulated and the strength of all combined, is some- 
 thing more than the aggregate of a thousand men. 
 Such things are not to be calculated by rule of three ; 
 and it is the same with labour. What we need is to 
 organise our efforts, to use each individual to the best 
 advantage, and win our way not by sheer power of 
 numbers but by scientific co-operation. If Japhet 
 instead of joining his brothers in Noah's field had turned 
 his attention to the science of manures and spent his 
 time in pounding up Mammoth's bones, I have no 
 doubt that his labour would have been more pro- 
 ductive than it was by working with a spade ; and 
 the harvest would have sufficed to feed the entire 
 population of the Ark. And so to-day, when the 
 nation increases in numbers, it does not follow that the 
 new-comers will necessarily be set to work at the old 
 industries. In modern campaigns they say that three 
 men are employed behind the firing line for every one 
 in the trenches ; and equally in the work of production 
 a man contributes as much to the success of the harvest, 
 if he makes a plough as if he drives it. So, though 
 every acre of the earth were cultivated (which it is not) 
 there would still be room for helpers in the workshop or 
 the mine, or perhaps even more in the laboratory or the 
 offices of the Board of Trade. The true function of 
 science is to increase the efficiency of the race, and not 
 to curtail its numbers. Wise use of man-power and 
 skilful adaptation of machinery is the swiftest cure for 
 our industrial distresses. For not only will efficiency 
 increase production ; but also by the increase of produc- 
 
36 NEW FALLACIES OF MIDAS 
 
 tion efficiency will also be itself increased. Men who 
 consume freely will also produce freely ; and experienee 
 shows that the well-fed and prosperous worker is more 
 efficient and more productive than the destitute and 
 hungry. Under proper conditions every new child that 
 is born into the world, should be a reinforcement to 
 our strength and not a drain on our resources ; mean- 
 while, in this faith, we need fear no rising birth-rate 
 nor copy Spartan methods with our babies yet. 
 
 This old-fashioned bogey which so alarmed our 
 grandfathers now counts among exploded fallacies, 
 and if we seek to understand the paradox of modern 
 progressand know why a world which has become so 
 rich must still work so hard, we shall not look to the 
 growth of population, but rather to the facts of human 
 nature. The clue lies in studying psychology instead 
 of statistics, and in endeavouring to reform ourselves 
 rather than our institutions. The most sweeping 
 social revolution could not alone avail to help us much. 
 For the redistribution of the good things of life would 
 be useless, unless the good things continue to flow in 
 from field and factory. And if the flow is to continue, 
 so must work also. The truth is that as long as human 
 needs and appetites increase, the stress of work cannot 
 be diminished. For a fact more permanent than 
 private property, more universal than the selfishness 
 of the rich is the inability of human nature to be content 
 with what it has. Mankind is as insatiable as the leaky 
 jar which the Danaids were for ever filling but which 
 was never full. We are like children who demand jam, 
 when served with bread and butter ; and then when 
 given what they ask, immediately call out for cake. Half 
 a century ago we learnt to ride on wheels ; but no 
 sooner had we done so, than we sought some automatic 
 method of propulsion ; so we have passed from one 
 invention to another, until what was once considered 
 a miracle of speed, now seems a snail's pace. Last of 
 
THE PARADOX OF PROGRESS 37 
 
 all, having tired of such dull terrestrial motions, we 
 have taken to ourselves wings and aspire to navigate 
 the skies. Now, as we have seen, science and invention 
 can do much to lighten the task of manufacture. By 
 patient industry and forethought the business of 
 wheel-making might become mere child's play and 
 every man might own his cycle ; but if the moment 
 that this has been achieved, man discovers a need for 
 aeroplanes and motor-cars as well, he is imposing upon 
 himself a fresh and still more arduous task. His energy 
 and enterprise we cannot but admire, but if he grumbles 
 at the trouble of producing them, we must tell him that 
 he has only himself to blame. 
 
 It is perhaps too frequently forgotten that much 
 as our capacity for production has increased, our 
 capacity for consumption has increased along with it. 
 This is, beyond doubt, both inevitable and right ; 
 but no less inevitable is a corresponding necessity for 
 work. Were we content to-day with the simple fare 
 and scant comfort of the old cave-dwellers, one hour's 
 work out of the twenty-four v/ould easily suffice to 
 meet the call. Even to maintain the standard of a 
 century ago, we might well dispense with working 
 overtime. But with that standard no modern labourer 
 would ever be satisfied ; he expects and gets all manner 
 of things his father never dreamt of. Not only does 
 he keep a better table, wear smarter clothes, and furnish 
 his cottage more pretentiously ; but as often as not he 
 will buy his evening paper to read the racing results. 
 On Bank Holidays he will take a trip to the seaside. 
 Cheap gramophones are to be found in every home. 
 Ihe music halls are crowded. Life offers to him 
 numberless new opportunities of comfort and amuse- 
 ment ; and naturally enough he desires to gratify 
 these new found wants. But sometimes it seems to 
 escape him, when he makes his frequent demand for 
 shorter hours, that to all this growing plenty 
 
38 NEW FALLACIES OF MIDAS 
 
 there must be another side. Food, houses, gramo- 
 phones and papers do not grow upon the hedgerows. 
 They cannot be cheap and plentiful unless somebody 
 works to make them so. Not even the working man 
 can have his argument both ways. Leisure and 
 pleasure are two excellent things ; but, being as they 
 are mutually exclusive, a choice must be made between 
 them. If the burden of production is to be lightened, 
 there is one easy way and that is the limitation of 
 consumption, and if we cannot have all that we want 
 without intolerable exertion, we must be content with 
 less. We must learn to check or correct the growth 
 of our desires, or rather to discriminate between those 
 which should be gratified and those which should be 
 denied. Real progress lies not so much in the mere 
 multiplication of our wealth, as in the proper discern- 
 ment of what is true wealth and what is not. 
 
CHAPTER V 
 
 LUXURIES AND NECESSITIES 
 
 Everyone would agree that there are many pleasures 
 which it would be better to do without ; but the agree- 
 ment ceases, when we begin to consider which they are. 
 It might be an amusing exercise to draw some imaginary 
 line between the ''necessities " and the ''luxuries" 
 of life ; but in practice such a differentiation is as 
 useless as it is impossible. There can be no disputing 
 about tastes ; and what one man considers indispens- 
 able to comfort, his neighbour thinks an unjustifiable 
 extravagance. For what, are after all, the " necessities " 
 of life ? Food and drink certainly ; but how little 
 or how much ? Clothing is a necessity to most of us ; 
 but not to the native of Kikuyu. Houses are indis- 
 pensable, I suppose, in northern climates ; but umbrellas, 
 clocks, ornamental furniture and pictures, we could 
 do without every one of these at a pinch ; yet who 
 would discover a " luxury ' ' in the purchase of a drawing 
 room table or a cheap print of Raphael's Madonna. 
 Or, again, if past history is to be considered, we find 
 no fixed or level standard. Now-a-days a decent 
 drainage is considered a necessity ; but the Athenians 
 with all their culture and aesthetic taste, were not of 
 that opinion. And most certainly we should not thank 
 some candid admirer of the middle ages for reminding 
 us that life is tolerable without a bath. 
 
 The fact is that the " luxury ' ' of one generation is 
 the "necessity" of that which succeeds it. What 
 the few enjoy to-day as a privilege, the many will 
 demand as a right to-morrow. Human beings are 
 
 39 * 
 
40 NEW FALLACIES OF MIDAS 
 
 imitative creatures. If my neighbour hits upon some 
 new convenience or ornament of life, I, when I can 
 afford it, shall follow his example. So the habit 
 spreads till it becomes a fashion, until our children 
 will never be content to be without it, and that is how 
 the world moves forward. For this reason it would be 
 not merely idle, but positively dangerous to ban all 
 luxury, or to condemn the man who enjoys what others 
 lack. If nobody had ever for his own convenience 
 invented the luxury of a bathroom, our houses would 
 all be bathless to this day. Somebody must take the 
 lead ; then the rest will follow like a flock of sheep. 
 So long then as the present social and economic order of 
 the world continues, the forward march of civilisation 
 will depend mainly on the enterprise of individuals 
 and even the plutocrat may prove useful as an apostle 
 of progress. 
 
 And indeed it is no mere concession to self-indulgence 
 that allows the list of so-called necessities to lengthen. 
 Only the savage lives purely for his stomach. Among 
 civilised men other unnecessary tastes call for satis- 
 faction ; and, as Plato said, a life supported on a bare 
 margin of necessities would be fit for nothing but a 
 " town of pigs." It was never man's duty or his desire 
 to rest content with a minimum ; and the fulfilment 
 of the higher part of his nature requires not the necess- 
 ities alone, but a whole pantechnicon of comforts. It 
 is a favourite maxim with philanthropists that men 
 cannot be good so long as they are paupers ; and 
 although genius has sometimes thriven under the 
 severest of conditions, the best work is generally done 
 by those who are least handicapped by privation or dis- 
 comfort. Most of our own great poets (though poets and 
 artists are popularly supposed to starve) have been men 
 of comfortable means. The nerves and health of the 
 business man would suffer, if he could not retire 
 nightly to some distance from the town ; the scholar's 
 
LUXURIES AND NECESSITIES 41 
 
 work is in some measure dependent upon the comforts 
 of his study and his fireside chair ; and no Prime 
 Minister would be efficient who was forced to make his 
 own fire or to black his own boots in the morning. In 
 short, the more we intend to give the higher faculties 
 free play, the less interference must they suffer from 
 the body. It would indeed be an evil day for man 
 when he ceased to employ his hands and muscles ; 
 but he should be master and director of his physical 
 energies, not the slave of his physical needs ; and, as 
 time goes on, he will more and more rely upon arti- 
 ficial conveniences and comforts, and eliminate the 
 many minor occupations which now encroach upon the 
 main business of his life, and the many trivial anxieties 
 which distract his mind from better and worthier 
 things. 
 
 Yet, though " luxuries " may help the individual 
 to attain some higher standard of usefulness or culture, 
 it must not be forgotten that his advantage is almost 
 inevitably some other person's loss. If the supply of 
 both work and wealth were unlimited, I and my 
 neighbour might each of us have plenty, and the 
 indulgence of his luxurious habit need not be made at 
 my expense. But, unhappily, production is not un- 
 limited. The same field cannot produce potatoes for 
 him and pine-apples for me ; nor can a workman make 
 boots and silver buckles simultaneously. If then I 
 must go hungry that he may enjoy dessert, or ill-shod 
 that he may have fine buckles to his shoes, it is not 
 so easy to observe the precepts of the Tenth Com- 
 mandment. 
 
 This is precisely the grievance which the necessitious 
 poor may justly entertain against the luxurious rich. 
 Even though the latter' s wealth should not be wasted 
 on mere personal enjoyment, but wisely spent in the 
 service of science, art or culture, yet none the less the 
 many suffer (for a time at least) by what the few will 
 
42 NEW FALLACIES OF MIDAS 
 
 gain ; for wealth and labour which might have gone 
 to the production of necessities for the poor, will 
 have been diverted to unnecessary production for the 
 rich. When Mr. Lloyd George was conducting his 
 famous land campaign, the correspondence columns 
 in the daily papers were filled with the righteous 
 indignation of the threatened land-owners. On the 
 face of things he had some cause for his complaint. 
 Here was he, so his defence ran, making of his park 
 and garden an ornament to the countryside, advancing 
 the science of horticulture by his experiments with 
 pink carnations, and above all, providing work for a 
 score of gardeners who would otherwise be thrown 
 out of employment. Being a benefactor to the com- 
 munity on all three scores, he bitterly resented the un- 
 justified attack of an ungrateful politician. 
 
 The answer to his arguments is obvious enough. 
 '' If," we should say, " every man, woman and child 
 in England has bread enough and to spare, there is 
 no more to be said, and your claim to social virtue 
 may be granted. If however (as is very palpably 
 the case), many a child goes hungry because bread 
 is not plentiful or cheap enough to suit his parent's 
 pocket, then all your fine arguments are not worth the 
 cost of printing. As for the men who serve you, they 
 would be employed just the same, if your park were 
 ploughed up for corn and your garden thrown into 
 allotments. And what is more, they would be em- 
 ployed to far better purpose. At present, their labour 
 goes in the production of peaches and carnations ; 
 neither of which will go to fill a single poor child's 
 mouth ; but if the land were under crops there would 
 be potatoes or grain to show for it ; there would be 
 a substantial addition to the world's supply ; and, 
 since bread and vegetables do not dissolve into nothing- 
 ness, somebody would be fed who had previously 
 been stinted. 
 
LUXURIES AND NECESSITIES 43 
 
 The same argument holds good of hixury in all its 
 many forms. If the price of imports is kept high, 
 because a scarcity of ships makes freight dues heavy, 
 then the Transatlantic liner with its bedroom suites 
 and baths and tennis courts and promenades is a 
 crime against society. If, again, cheap motor-buses 
 are badly needed to carry labourers to their work, 
 what right has the milllionaire to occupy the mechanic's 
 time in making him a car. It is difficult to see how this 
 can be gainsaid, or how the sacrifice of these luxuries 
 could fail to confer a direct benefit on others. It is 
 too little remembered that thrift is a public service 
 as well as a private virtue. When a man saves a 
 hundred pounds and makes a new investment, he does 
 something more than increase his own personal income. 
 He also benefits the community at large. The benefit 
 is more obvious and direct if he invests his money 
 in a company which ministers to the public needs by 
 making motor cars or merchant ships. But whatever 
 be the form of investment he prefers, he is adding to 
 the sum of the world's capital, and thereby increasing 
 the total of the world's production ; and that is after 
 all one of the simplest ways of making the world 
 happy. 
 
 We need to think of the world more than we do as one 
 great household which is affected for good or for ill 
 by the thrift or extravagance of every member. The 
 father of a family would be blamed for spending his 
 wages upon drink, if this meant that his children 
 would go short of bread and butter. On the other 
 hand, he would be acting almost as foolishly if he 
 failed to keep himself in food and clothing adequate 
 to the maintenance of his own efficiency or position. 
 Certainly, if he can afford to do so without stinting his 
 family, it is a plain duty. He has in short to steer 
 a difficult course between conflicting claims, and he 
 must constantly be balancing one good against the 
 
44 NEW FALLACIES OF MIDAS 
 
 other. The same is true of the relation of each indi- 
 vidual towards the social family. He too must balance 
 the interests of others against the interests of self. 
 The two often seem to be utterly opposed ; and they 
 can be brought into harmony only by the knowledge 
 that each individual has a definite part to play as a 
 member of society and a citizen of the world. It 
 is his duty to play that part as usefully and efficiently 
 as he can ; and whatever enables him to do so, he is 
 well within his rights in claiming. If he works better 
 for some relaxation, let him by all means visit the 
 theatre or the golf-course ; if he can talk or write or 
 think the better for wide reading, let him buy books ; 
 if experience of the world will broaden his judgment 
 and his interests, let him travel. The indulgence of 
 these tastes (if they are within the compass of his 
 means) are at least a justifiable extravagance ; for 
 though they involve some drain upon the labour 
 and resources of the community, they confer an ade- 
 quate benefit in return ; a man, who is cheerful and 
 intelligent and open-minded, is at least not failing in 
 one duty to his fellow-men. On the other hand, 
 pleasures which lead nowhere, which take the bread 
 out of other people's mouths, or which squander the 
 fruit of other people's work without any such ulterior 
 compensation, are indefensible, at best they are a selfish 
 frivolity ; at worst they are a criminal waste. 
 
 In such matters it is of course impossible to lay 
 down any fixed code or canon, or to say which luxury 
 is justifiable and which is not. Every man must 
 judge for himself according to his own nature and 
 according to his own ideals. For one man a distant 
 week-end journey may be time and money well spent ; 
 for another the pleasure and value of the visit might 
 be altogether incommensurate with the cost. In order 
 to estimate the advantage or disadvantage of each 
 expenditure, we must know not merely the whole 
 
LUXURIES AND NECESSITIES 45 
 
 circumstances of the individual's life and character, 
 but the economic condition of the whole world as well. 
 To set a true value on every new departure from the 
 normal standard of life, we should require the gift of 
 prophec^^ ; for only if we were allowed to look into 
 the future could we tell whether (all things considered) 
 the new departure will have assisted progress or re- 
 tarded it, or whether the direction of energy into fresh 
 channels will have been a benefit or a waste. In such 
 ignorance of future developments men once debated 
 and doubted the value of the railway train, and even 
 now who can tell if the course which modern civilisation 
 is following is the right one, and whether our growing 
 desire for novelty and excitement, our preference for 
 town life over country life, and our restless pursuit of 
 luxuries at the expense of leisure will make for the 
 ultimate happiness or misery of mankind ? The 
 future is matter for guess work, and we must grope 
 forward following our instincts, but still more reaching 
 forward to our best ideals. We must first form in our 
 minds some clear conception of man's destiny, and 
 know what we would have him be ; and then perhaps 
 it may be less difficult to discriminate between his 
 desires and tell which is good to satisfy and which to 
 refuse. 
 
 Economic science must remain ill-defined and in- 
 conclusive if it considers only the satisfaction of 
 appetites or the regulation of supplies and there stops 
 short. We seek wealth wherewith to satisfy our needs, 
 since we believe that this will help to make us happy : 
 and just because happiness is a moral and not a 
 material state, we cannot neglect or exclude the moral 
 issues which underlie the production and consumption 
 of wealth. It is no profit to a man, if he gain the 
 whole world and lose his own soul ; and in the last 
 resort, the getting or the spending of wealth is nothing 
 except as it affects men's character for good or ill. 
 
46 NEW FALLACIES OF MIDAS 
 
 Labour is wrong which serves but to satisfy some 
 vicious craving ; and our desires are wrong too, if 
 other men, that we may be satisfied, must engage 
 on work which undermines the health or destroys 
 the soul. So long as even one member of the community 
 is deliberately sacrificed to the pleasure or gratification 
 of the rest, we cannot claim to have reached the 
 ideal state ; and the goal of political economy will 
 only have been won, when every human being alive 
 is both wise and happy, and has enough to win and 
 to maintain a sound mind in a sound body. 
 
CHAPTER VI 
 
 EXTRAVAGANCE AND WASTE 
 
 Before however we try to picture the state of 
 society which we desire to see estabUshed and towards 
 which, so far as we may, we must endeavour to shape 
 our future course, it is worth while to take stock of 
 our present condition of the world, and to examine 
 more closely some types of production which are 
 without doubt wasteful or deleterious to mankind. 
 I say production (though clearly the consumer who 
 demands the goods is the primary cause of their 
 manufacture) partly because production precedes 
 consumption and is therefore more easy to regulate 
 at the source, partlj^ because the man who produces 
 or purveys a harmful luxury is often as much to blame 
 as the man who buys it. Human imagination is so 
 feeble that we seldom know what we want until we 
 see it ; and human nature is so weak that when we 
 have seen we often lack strength to refuse. One sets 
 the fashion and others follow ; and the consumer's 
 gullibility becomes the producer's opportunity ; so 
 the one may do as much harm by his haste to make 
 money as the other by his readiness to spend it. 
 
 It is a common practice with economists to divide 
 labour into two classes, productive and unproductive. 
 This classification is clearly not to be taken in its 
 literal sense ; for absolutely unproductive labour 
 is a contradiction in terms ; unless it were the building 
 of a house like a card castle simply in order to knock 
 it down again, such a thing does not exist ; all labour 
 is directed to some end and therefore produces 
 
 47 
 
48 NEW FALLACIES OF MIDAS 
 
 something. The true meaning then of the distinc- 
 tion must be this ; some forms of labour tend to 
 the increasing of man's real wealth, these are pro- 
 ductive ; others on the contrary to wasting or destroy- 
 ing it, these are unproductive. The most obvious 
 instance of such destructive or unproductive labour 
 is the manufacture of military material. From a 
 national point of view indeed this seems to satisfy a 
 legitimate desire for peace and safety ; and nothing 
 is more necessary than to be well armed, if there is 
 a bellicose neighbour across your border ; but for all 
 that nothing does more to fritter away the wealth of 
 the world. People talk sometimes as though the 
 building of dreadnoughts or the casting of howitzers 
 were a blessing in disguise, because forsooth it gives 
 employment to so many thousand artisans. There 
 could be no more pernicious fallacy ; the labour of 
 this vast host of men could be put to some far better 
 use than the manufacture of instruments which are 
 intended for no other purpose than to blow our 
 neighbour's towns into the air or to send our neigh- 
 bours' ships (built also at great expenditure of pains 
 by them) to the bottom of the sea. The men who 
 can build a man-of-war can also build a merchant 
 ship, and lathes which can turn shells, can turn engine- 
 shafts or cylinders too. To convert these warlike 
 preparations into peaceful industries might once have 
 seemed a difficult matter ; but four years of war have 
 shown us how swift a conversion may be possible in 
 a contrary direction, and if we can beat our plough- 
 shares into swords so easily, we can surely find little 
 hindrance to beating them back again. The trans- 
 formation could be achieved ; and if it were, an immense 
 economy would result from it. The nation would save I 
 know not how many millions in taxation ; and we 
 should be free to invest all those saved millions in the 
 building of merchant ships or machinery or whatever 
 
EXTRAVAGANCE AND WASTE 49 
 
 we need. Under the conditions of the years before 
 the war, the peoples of Europe have resembled as it 
 were the builders of Jerusalem, who worked with 
 trowel in one hand and sword in the other, a posture 
 equally ill-adapted for good masonry or prosperous 
 industry. To rid ourselves of this handicap, we must 
 effect a complete reversal of the policies and relations 
 of all the peoples of the world ; and even now who can 
 say if such a miracle be possible ? But if there ever 
 comes a day when mankind shall be free to get both 
 hands to the work, an intolerable burden will have fallen 
 in an instant from our shoulders. 
 
 There are other trades less honourable and if anything 
 more deadly than the trade of war. To name but one, 
 there is the manufacture of spirits and drugs that under- 
 mine the health and morality of whole nations. 
 Opium and absinthe have wrought more havoc than 
 many wars, and the suppression of vodka among the 
 Russians has added as much to the national happiness 
 as it can ever add millions to the national wealth.* 
 But out of the bulk of the world's production there is 
 comparatively little that can be called down-right 
 destructive ; far more misdirected energy is wasted 
 upon the manufacture of goods which are neither 
 directly harmful nor directly beneficial but simply 
 negative in their effect. Now, though these do not 
 actually destroy the fruit of other men's labour ; neither 
 do they add in the smallest degree to men's efficiency 
 or strength or skill. In other words they are unpro- 
 ductive. Productive labour on the other hand does 
 essentially add to man's efficiency and so pave the way 
 for further production. It yields a return, so to speak, 
 at compound interest, building up man's strength for 
 fresh labours, and endowing him with skill or knowledge 
 for fresh activities. The making of food and clothing 
 is productive labour ; for though the food is consumed 
 
 * There are more than ever drunk now (June, 191 8). 
 
50 NEW FALLACIES OF MIDAS 
 
 and the clothes wear out, yet we have something to 
 show for them. The bread which builds muscle and 
 the clothes which keep a man dry and fit and warm, 
 render him more capable for his day's work, and so 
 enable him to take his share in fresh production. 
 Even less material s<itisfactions, such as art or social 
 intercourse or sport, leave some permanent result 
 behind. Pleasures which afford wholesome recreation 
 to tired body or jaded mind are far from wasted ; pictures 
 music, poetry and learning store the mind with thoughts 
 and memories and high ideals which are a possession 
 beyond price and wealth for ever. But contrast 
 these with the fruits of " unproductive " labour, un- 
 wholesome food which gratifies, but does not feed, 
 empty pleasures which degrade and exhaust instead of 
 ennobling and reviving, flashy ornaments which have 
 no saving quality of permanence or grace. All these 
 are so much honest labour and good material thrown 
 away. 
 
 These satisfactions which do not satisfy, and 
 pleasures which have no permanent effect, have 
 been common in every age but perhaps in none 
 so much as ours. The very facility and variety of 
 modern mechanical production has flooded the market 
 with meritricious and inexpensive articles, vv^ith the 
 result that the standard of workmanship is lowered 
 and public taste degraded. Vulgar taste is the pet 
 extravagance of the century. The shops are full of 
 goods which are cheap and nasty, yet tempting through 
 their very cheapness. The poorer the buyer the greater 
 the fascination which they will exercise upon him. 
 In East London a lad will buy half a dozen shoddy 
 cloth caps in as many months, though the combined 
 cost of the six will far exceed the price of a single good 
 one. It is true the manufacture of the cheap inferior 
 goods is in many ways a benefit to the poor and is 
 not in the strict sense "unproductive." They satisfy 
 
EXTRAVAGANCE AND WASTE 51 
 
 indeed, but the satisfaction is transitory or superficial 
 and their manufacture represents wasted time and 
 wasted trouble, because it is not the best labour which 
 men are capable of performing, and it is never good 
 economy to give your second best. The demand for 
 them encourages hurried, careless or mechanical work, 
 and because such work is always liable to be under- 
 paid (the trade in cheap shirts and ready made suits 
 is notoriously conducted on "sweated" labour), the 
 efficiency of the worker deteriorates and the quality 
 of his future production suffers accordingly. The 
 manufacture of half the goods which we see upon 
 the counters, whether it be done by hand or by machine, 
 is soul-destroying work which it profits no man to 
 perform. And upon the consumer himself the craze 
 for cheapness has an influence which is anything but 
 good. He gets, it is true, " a lot for his money," but 
 he does not in the long run profit by the bargain. 
 In the first place, quantity is no true equivalent for 
 loss of quality. Boots made out of paper will not 
 wear, and the second rate watch takes a heavy toll 
 in frequent visits to the mender. The moral effect 
 is even worse ; for the lure of fashionable smartness 
 blinds the eyes to true utility and prevents us from 
 setting a just value upon the strength and beauty of 
 good workmanship. Lastly, it encourages thrift- 
 lessness under the semblance of thrift. The behaviour 
 of ladies at a " sale " is an epitome of human weakness 
 in this respect. Because we sight a " bargain " we 
 buy what we do not really want ; or at any rate what 
 we cannot afford. We rent pretentious villas built 
 of lath and plaster and adorned with hideous terra- 
 cotta tiles ; we fill them with furniture, not such as 
 our forefathers once made to out-last centuries, and to 
 be handed as an heirloom to generations, but miserable 
 pinchbeck stuff that lasts a twelve-month and 
 then falls speedily to pieces ; we drink wine manu- 
 
52 NEW FALLACIES OF MIDAS 
 
 factured from currants, hang artists' " pot-boilers " 
 upon our walls, dine off imitation willow-pattern 
 plates, and all to make, as we fancy, a brave show, 
 and practice upon the world's credulity. There is 
 scarcely a feature of our modern life but bears witness 
 to the crimes and follies committed in the name of 
 cheapness. 
 
 There is one other form of waste which in comparison 
 with this last might seem excusable or even merit- 
 orious ; I mean the waste which occurs in production 
 through the use of superfluous labour or the expend- 
 iture of unnecessary material. We should naturally 
 applaud the man who lavishes superfluous energy 
 upon his work from pure excess of zeal. But no 
 praise is due when he does it from love of gain or 
 from mere stupidity. We should call it culpable 
 waste to employ two men to produce a thing when 
 a single man could produce it just as well ; yet in 
 one way or another most manufacturers are guilty 
 of this unbusinesslike proceeding. The most noticeable 
 and obvious instance of such a practice is the 
 excessive use of advertisement.* It may be needful, 
 as things are, to advertise, all is part of the price we 
 pay for the questionable advantages of a competitive 
 market. But advertisement on the present scale 
 adopted is far in excess of what is necessary for the 
 simple purpose of giving information, and (though 
 experts differ as to the exact amount spent yearly in 
 this way) it unquestionably represents an enormous 
 addition, both in labour and material, to the total cost 
 of production. The consumer benefits, it is true, in so 
 far as his attention is attracted or his interest artificially 
 aroused ; but even this is a doubtful blessing, and he 
 little guesses how dear he has to pay for it. Some 
 
 *0n the other hand, advertisement in moderation is not merely- 
 legitimate, but necessary. People must have information : and the 
 spreading of information, if properly organised, is a real economy. 
 
EXTRAVAGANCE AND WASTE 53 
 
 clever quack concocts a new pill, from harmless, and 
 common-place ingredients ; and then trumpets forth 
 his great discovery in immoderate terms. His grate- 
 ful dupes flock in their thousands to the chemist's 
 shop and buy it, and the pill, for aught we know, may 
 effect a multitude of cures ; but would it have effected 
 less if newspaper compositors had been spared the 
 trouble of setting up a hundred lines of print ex- 
 tolling the virtues of the pill, or if some popular black 
 and white artist of the staff of Punch had never been 
 paid to prostitute his genius by designing humorous 
 appeals to supposed sufferers, or drawing pathetic 
 portraits of anaemic children ? Has the drug acquired 
 new properties, because carpenters and bill-posters 
 are set to disfigure the country-side and make our streets 
 more hideous b} the erection of preposterous hoardings ? 
 All this labour, when we come to think of it, benefits 
 nobody ; and if it be a necessary feature of com- 
 petitive trading, so much the worse for competition, 
 and so much worse above all, for the unfortunate 
 consumer. Yet, oddly enough he never seems to realise 
 what an immense tax advertisement imposes upon 
 himself. He imagines perhaps that when Messrs. X. 
 present him with sample tins of cocoa or free catalogues 
 of their sunimer sale they do so at their own expense. 
 But if he reflected for a moment he would see that 
 Messrs X. are out to make money. They require a 
 clear profit over the working expenses of their business, 
 and when they expend half as much again as the cocoa 
 costs upon the advertisement of its qualities, they 
 must of necessity raise its price in proportion. In 
 fine, those columns in the Daily Mail and those 
 hoardings erected in the streets are paid for some- 
 how, and in the last resort the money comes out 
 of the buyer's purse. We are a short-sighted, long- 
 suffering people, and we take all this as a matter 
 of course. Yet if a gentleman kept a trained 
 
54 NEW FALLACIES OF MIDAS 
 
 journalist in the kitchen that while the cook was 
 preparing the dinner, he might be composing a 
 seductive menu to induce the guests to partake of 
 her delicacies we should write him down as a fool 
 or worse. 
 
 But business methods which pass for enterprising, 
 smart and up-to-date are not the only or the chief 
 cause of dissipated energy. Far more waste is caused 
 by methods which on the contrary are lax, old-fashioned 
 and inefficient. Our industries are often regulated upon 
 a system which is twenty years behind the times. 
 In many factories the machinery in use is of a clumsy 
 and antiquated type ; and if here and there a really 
 up-to-date machine is to be found, it will hail as likely 
 as not from the United States. Our railways are run 
 without any strict notion of economy. Half their 
 rolling-stock is kept standing idle from one year's 
 end to the other ; and it has even been asserted that 
 the average distance covered by a single truck is not 
 much more than one mile per diem.* Automatic 
 methods of loading, which might be installed at no 
 great outlay and which would more than pay their 
 cost in the economy of human labour, are not seriously 
 considered. There is a similar scope for reformed 
 methods and better organisation in almost every 
 department of industry ; but perhaps the most startling 
 and prodigious waste arises not so much in the process 
 of production or manufacture but in the course of 
 sale. The retail trade is not in itself an unproductive 
 form of labour. Wealth is by definition that which 
 satisfies my needs ; and my needs are not satisfied 
 by a heap of coal at a Welsh pit-head or raw tobacco 
 in Virginia. The middle man who delivers the one at 
 my house and sells me the other across the counter 
 
 * The estimate, which in the absence of statistical returns by the 
 companies themselves cannot be final, is as follows : — 1.57 miles per 
 day at 20 miles per hour, i.e.y under 5 minutes per day in effective 
 motion per waggon. 
 
EXTRAVAGANCE AND WASTE 55 
 
 is rendering me as important a service as the miner 
 who wins the coal out of the pit, or the dealer who 
 manufactures a cigar. Goods must be handled in 
 large consignments by wholesale dealers, and then 
 passed on by them to the retail dealers for distribution. 
 Each performs a useful and necessary part and rightly 
 claims a profit on the deal. But it is neither necessary 
 nor useful that out of a population of twenty million 
 workers two million should be engaged in such an 
 occupation. That is to say that every five families in 
 the country employ one person thus to wait upon 
 their wants. The links in the chain connecting 
 the consumer and the original producer have in short 
 been multiplied beyond all reason, and the facts have 
 only to be stated to appear ridiculous. It was the 
 natives of the Hebrides who according to Dr. Johnson's 
 epigram earned a precarious livelihood by taking in 
 each other's washing. But it has remained for the 
 " nation of shopkeepers " to discover the more excellent 
 method of waiting on one another across the counter. 
 But the indictment does not end there. After all 
 these years of science and invention there is still 
 scarcely a trade in which human energy is not squan- 
 dered, scarcely a job which could not be performed 
 with less effort and more efhciency by taking thought 
 a little. We have yet to study the use and capabilities 
 of the human instrument as closely as we calculate 
 the power of inanimate machines : and here again 
 there is much that America can teach us. Ever 
 since the first experiments were made by James 
 Taylor, of Pennsylvania, over thirty years ago, the 
 methods known as Scientific Management have there 
 spread rapidly. Taylor himself began his tests in 
 loading pig iron. He first selected men of suitable 
 physique : then he timed them at their work, varying 
 the periods of activity and rest until he had ascertained 
 the most effective combination. His deductions 
 
56 NEW FALLACIES OF MIDAS 
 
 drawn, he was allowed to put them into practice at 
 the Bethlehem steel works : and at the end of some 
 three years, the experiment has attained the following 
 remarkable results. In yards where 400 to 600 men 
 had been hitherto employed, 140 now sufficed. Each 
 man was handling ten to fifty- nine more tons per diem ; 
 and his daily wage was increased by nearly seventy 
 per cent. Taylor's idea spread : one of his followers 
 made similar experiments in bricklaying. He dis- 
 covered the ideal height for the mortar box and 
 brick pile ; he designed an adjustable scaffold : and 
 at last by these and other devices he relieved the 
 labourer of so much superfluous exertion in bending 
 down and straightening up, in sorting out the bricks 
 and turning them in his hand, that the number of 
 movements that went to the laying of a brick were 
 reduced from thirteen to five, and the tal^ of bricks 
 laid by a single workman in an hour was practically 
 trebled. We need not follow the history of the method 
 into other trades. Enough has been said to show that 
 scientific management may work a real revolution 
 in industrial output. It has, no doubt, its dangers as 
 well as its advantages. Too great a tax may be put 
 upon the workers' powers : the work itself may become 
 too stereotyped and too monotonous : and in general 
 the whole system seems open to the charge that it 
 treats the human being too much as a machine and 
 leaves too little to his own initative. The antidote 
 is not far to seek. True scientific management will 
 study psychology as well as statistics. It will consider 
 human needs as well as human capacities. And 
 it will give individuality full play, because the best 
 work demands it. At any rate it is clear that much 
 purposeless waste of effort now goes on which careful 
 regulation and adaptation could prevent. Problems 
 of man power are not confined to war : but war may 
 have taught us a better and wiser use of it : and when 
 
EXTRAVAGANCE AND WASTE 57 
 
 we have learnt the lesson, we may count upon a 
 sure reward. The day will come when every labourer 
 will be not merely more efficient in his work, but more 
 prosperous, more leisured, more contented. It is 
 a fact v/orth noting that wherever the Taylor system 
 has been introduced, strikes and labour troubles are 
 said to be altogether unknown.* 
 
 Habit is strong ; and to remedy this state of things 
 will take many years and much careful organisation. 
 But amongst other things the war has proved a great 
 awakener ; and little by little the forces of sound 
 business and true economy will probably prevail over 
 our haphazard and extravagant methods. Already the 
 small shopkeeper is struggling hard in competition with 
 the great stores which traffic upon a larger and less 
 wasteful scale. Our industries too, are waking up ; their 
 leaders are beginning to put their house in order. 
 Science has now become the battle-cry of commerce, 
 and with better organisation and more up-to-date 
 equipment our factories will outstrip all previous records 
 of production. There are signs too that the other 
 manifold abuses of our economic system, will presently 
 be reformed. The thriftless and selfish use of 
 riches will be curbed ; — let us hope by men's own 
 voluntary sacrifice and their sense of public duty ; 
 but if not, then it will be done by presure from without. 
 The patience of democracies is not unlimited ; and the 
 will of the majority is found to prevail in the end ; 
 and if the cupidity and self-indulgence of the few 
 continues to waste the wealth which is vital to the 
 welfare and progress of many, then the state has 
 many weapons ready to. her hand. If land is witheld 
 from profitable cultivation for motives of financial 
 gain or private pleasure, then the law may one day 
 
 ♦Concerning the whole system see " The Principles of Scientific 
 Management," F. W. Taylor and " Psychology and Industrial 
 Efficiency," Hugo Miinsterberg. 
 
58 NEW FALLACIES OF MIDAS 
 
 intervene ; heavy taxes may, if needful, be imposed 
 upon the owner ; or if that is not enough, there is 
 confiscation as a last resource ; which as it were 
 by a stroke of the pen would convert pleasure parks 
 into corn-fields and shooting moors into timber forests. 
 Railways, coal-mines and even factories may one day 
 be taken out of private hands and run in the interests 
 of the whole community. Many experiments of this 
 sort are already within sight ; some have actually 
 been attempted. We have fallen indeed under the 
 spell of the Socialist Gospel, and being blinded by the 
 dazzling promise of democracy we look to her to per- 
 form miracles and remove great mountains. But 
 let us not be deceived ; if we pin our faith on legislation 
 it will surely fail us yet, and our goal will seem as far 
 away as ever. It is easy to confiscate; it is less 
 easy to create. The salvation which we seek must be 
 sought in the change of man's own self and not in the 
 mere reform of institutions. No act of Parliament 
 can make a people good ; neither can it make them 
 truly rich or truly happy. By compulsion, you may 
 check waste, eliminate extravagance, organise in- 
 dustry and ease the dead weight of man's necessary 
 toil ; but there the operation of compulsion ceases ; 
 it can never cultivate in the producers the lively spirit 
 of invention, nor a pride in honest craftmanship ; it 
 can never teach the consumers to prefer good work 
 to cheap work, nor to set quality before quantity 
 and satisfactions which are solid and beneficial before 
 those that are frivolous and worthless. This change 
 can only come by the gradual education of men's 
 tastes, and intellects and consciences, never by the 
 drafting of rules and regulations. Compulsion alone 
 is powerless to realise man's highest destiny and his 
 best ideals, nor will it avail in ten thousand years 
 to unlock the gates and people the streets of the fabled 
 city of Utopia. 
 
CHAPTER VII 
 UTOPIA 
 
 (i.) 
 
 What society will be like, and how man will live in the 
 days when all are wise and happy, has been the therae 
 of many a philosopher, from Plato and Sir Thomas 
 More down to Mr. H. G. Wells. As is to be xpected 
 no two of them are agreed together ; for it is impossible 
 to say for certain what posterity will want or perhaps 
 even what it ought to want ; and at best we can only 
 guess. Nevertheless such guess-work has its purpose 
 and its uses ; for did we not have some notion whither 
 we are bound, how could we tell the road ? There are 
 times in the world's history (and this present may well 
 be one) when we stand doubtfully at parting ways 
 and when we must try to discern which of two roads 
 will lead us to our goal. We are tempted naturally 
 to take the more direct and then, too late may be, we 
 shall discover that the road we took was a wrong 
 turning and the more devious and difhcult was the right 
 one after all. Therefore, to draw, if only in imagination, 
 the lines of our ideal society, is but to mark, as 
 it were, our destination on the map ; yet with this 
 difference ; in the map the country behind us and 
 before us is equally explored ; in the chart of human 
 history only the past is certain, what shall be can 
 only be conjectured from what has been and what is. 
 So, from the start we must assume (not blindly indeed, 
 but with good reason) that the principles which held 
 good yesterday and to-day will hold good to-morrow 
 also ; and that however custom and circumstance 
 
 59 
 
6o NEW FALLACIES OF MIDAS 
 
 may alter, the instincts and ideals of human nature 
 will in essence remain unchanged. 
 
 Among all the pictures wherein men have fore- 
 shadowed the coming of that ideal State towards which 
 we all hope the world is moving, not the least daring, and 
 yet perhaps the most truly and imaginatively drawn, 
 is the work of William Morris. No student of political 
 economy can read his " News from Nowhere " without 
 a genuine delight, nor put it down without some 
 re-awakened hope for human destiny. One great 
 advantage at least it can claim over its predecessors, in 
 that it was written after the Industrial Revolution had 
 matured, and when our experience of the new uses of 
 machinery had already taught us something both of 
 their blessing and of their curse. On Morris' own mind, 
 it is true, it was the evil side of this development which 
 made the more lasting impression. He depreciates 
 almost wilfully the value of mechanical invention ; 
 he would fain break down the factory and the engine 
 to set up the joiner's bench and the blacksmith's 
 anvil, so dogmatically does he deny the right of dynamo 
 and power-wheel to replace the craft of hand or skill of 
 eye. Yet, by whatever narrowness of vision the 
 mediaeval sympathies of Morris have availed to warp 
 the details of the picture, none the less its main per- 
 spective is accurate and broad ; its atmosphere shines 
 true. His ideal country is a very human place, his 
 men and women find happiness in just those things 
 wherein men and women have always found them. His 
 at least is a society which we might love and welcome ; 
 and whereas Plato's Republic is too stern and grim 
 for most of us, More's at once too naive and too 
 sophisticated, I doubt if the man exists who would not 
 most gladly and thankfully awaken, as Morris' hero 
 woke, to find himself a temporary inhabitant of the 
 delectable country of Nowhere. 
 
UTOPIA 6i 
 
 It was (or so it seemed) a beautiful bright morning of 
 June, when he left his suburban residence very early 
 before breakfast to take a stroll by the river-side. 
 He was a Londoner of Radical instincts and member of 
 a club of red-hot Socialists, whose tongues had wagged 
 freely overnight concerning the great revolution 
 which was one day to come over the world. His 
 thoughts, as they ran back over the academic argu- 
 ments of the debate, were suddenly distracted by the 
 changed aspect of the scene before him. He stood by 
 the Thames, yet somehow not the Thames. The 
 ferry-man whom he engaged to row him out, was dressed 
 in a flowing blue tunic and talked like a well-bred 
 courtier. As he rowed the boat down-stream past a 
 sleepy, smokeless Hammersmith, discoursing strange 
 things, as he rowed, concerning the salmon fisheries of 
 Putney, they came presently upon a bridge so grand 
 and fanciful that it outvied the Ponte Vecchio itself 
 for strength and beauty. By this bridge the ferry-man 
 moored his boat and brushing all offer of pay aside, 
 conducted his astonished fare to a restaurant or ** Guest 
 House." This Guest House was a frescoed hall with 
 Gothic windows, marbled floor and open timber roof. 
 As the pair entered, the waiting girls left scattering 
 their balms and lavender upon the floor, and, taking 
 each guest by the hand, led them to a table whereon 
 were set ripe strawberries and roses freshly gathered 
 from the garden plot outside. There sat down to 
 table with them a Y orkshireman, a weaver by trade, 
 who (as his friend the ferry-man explained) had over- 
 done himself between working at his loom and his 
 mathematics, and had come to stay in London, of all 
 places in the world, for an out-door holiday. The 
 Guest (for so the two friends agreed to call our stranger) 
 was consumed with curiosity to know what all this 
 might mean, but when he read upon the wall an 
 inscription dated 1962, heard his companions talk of 
 
62 NEW FALLACIES OF MIDAS 
 
 Epping Forest cleared of houses, and finally was 
 introduced to a dustman who wore a surcoat of 
 embroidered gold, and whose leisure hours were spent 
 in writing " reactionary novels," he left his doubts and 
 his questions unspoken, and abandoned himself as to a 
 preposterous dream. 
 
 The ferry-man, whose calling seemed to make no 
 special claim upon his time, now proposed to take the 
 guest out for a drive and to show him the sights of 
 London. So the Golden Dustman was dispatched to 
 borrow them a horse and cart, and off they went. 
 The sights of London were the most miraculous of all. 
 What strange sights the Guest saw there and what 
 stranger facts were then disclosed to him, how he met 
 an aged antiquarian and heard from his lips the true 
 history of the great change, how he learnt, that all 
 central governments were abolished and Parish »Parlia- 
 ments reigned supreme, how he found the great 
 metropolis as modest, cleanly and demure as a little 
 market-town, Kensington a landscape dotted with 
 green trees, and Piccadilly a " short street of hand- 
 somely built houses," how Trafalgar Square was an 
 orchard full of apricots, and the House of Commons a 
 storage for manure ; — all this is a long tale which would 
 but spoil in the telling. But, in brief, it was a changed 
 London and a different world, different in the simplicity 
 of the people's taste, the sober neatness of their 
 dwellings, the beauty and aptness of their dress ; differ- 
 ent too in the tranquil course of their work and leisure, 
 free alike from anxious hurry as from vulgar dissi- 
 pation ; but different above all in their frank good- 
 natured happiness and their unfailing zest to be always 
 doing a neighbour some good turn. 
 
 In their work (and they are indefatigable workers) 
 the first and guiding principle is to study the needs of 
 others, the second to choose that task which best is 
 suited to the aptitude and taste of each ; the third, to 
 
UTOPIA 63 
 
 do whatever their hands contrived, with all their might 
 and in scorn of slovenly or hurried workmanship. 
 
 Manufacture is now wholesome where it had been 
 foul and sordid, agreeable where it had been distasteful, 
 a quickening joy where it had been a deadening 
 drudgery. In short, it is become once more, as by its 
 very name it should be, a craft of hand ; and by one 
 expedient or another, the various evils of Industrialism 
 as we know it, have in Morris' Utopia been done away. 
 
 We may note, firstly, that wherever hand-made 
 products are superior to machine-made, the latter have 
 been discarded altogether. Thus thousands whose 
 life was formerly one long maze of whirring wheels, and 
 the dull recurrence of a soulless task, now in the happy 
 land of Nowhere, taste the joys of individual craft- 
 manship, and each learns to set upon his work the 
 impress of his self. Some drive their independent 
 trades ; others unite in Banded Work-shops to carry 
 on the more complex processes. Each to his choice ; 
 and even the heat of kilns and furnaces will not deter 
 some enthusiasts from glazing pottery or blowing 
 glass. 
 
 Secondly, though handiwork has in the main sup- 
 planted machinery, yet " all work irksome to do by 
 hand, is done by immensely improved machinery." 
 
 Thirdly, " When any piece of work is found too 
 disagreeable or troublesome, it is given up and folk 
 do altogether without the thing produced by it." 
 
 Fourthly, toilsome but necessary tasks such as the 
 making of roads or the digging of mines, are undertaken 
 by the young and stalwart, in a spirit of cheerful 
 service ; and as the ferry-man remarked, it is " good 
 sport trying how much pick-work one can get into an 
 hour," and a good training for the muscles to boot. 
 
 Fifthly, and perhaps most noteworthy, of all, there 
 is variety of work for every one. For, just as each has 
 the free choice of his trade or profession, so each equally 
 
64 NEW FALLACIES OF MIDAS 
 
 enjoys the free disposition of his time. Thus every 
 man can indulge his peculiar hobby ; a weaver may 
 spend his spare hours on geometry, a dustman in 
 writing romances. If a helping hand is needed in 
 some other quarter the daily task may be allowed to 
 slide, and Morris' last chapters tell of a merry company 
 of miscellaneous folk, gathered in the hay-fields of the 
 Upper Thames. The ferry-man is there and has left 
 his boat ; the girls are there and have laid aside 
 their household duties ; even men of science, 
 students and historians abandon their sedentary lives, 
 and though some are poor hands at the start, all join 
 in the game. Only certain churlish house-builders 
 refuse their help^ — because forsooth they have found a 
 job which " interests them," and they prefer to get on 
 with their work. 
 
 (ii.) 
 
 Morris was no trained economist. Romance was 
 more to him than science. His whole-hearted faith in 
 human nature, his clear vision of what man might be 
 at his best, rendered him impatient of material 
 obstacles. For him to conceive of a Utopia was to 
 believe in its possibility, and for such a nature nothing 
 that was right was impracticable. Nevertheless, along 
 with much that is pure fancy, there is also contained 
 in his picture much that is sound sense ; and it is well 
 worth while to sift and disengage the two ; For every 
 reader, I suppose, the first impulse is to doubt whether 
 any country which did its business upon such hap- 
 hazard and ill-regulated methods as Morris' imaginary 
 state, could possibly survive for a week. We are 
 accustomed to believe that such prosperity as we enjoy 
 is due in no small measure to the nice adjustment and 
 close co-ordination of our industrial machine. Organ- 
 isation is the catch word of the day, and we have 
 
UTOPIA 65 
 
 admired and feared by turns that nation which has 
 brought such mechanical efficiency to its highest pitch. 
 Yet the worth of a system is to be known by its fruits, 
 and we have seen what a harvest the Germans at least 
 have reaped of theirs. To transform a people into 
 a vast machine, to treat men and women as mere 
 cogs upon a wheel, that is not the road to happiness, 
 nor even in the long run perhaps to success. Elaborate 
 as may be details of such a system and perfect as may 
 be its method of getting the best work from each 
 individual man or woman, yet so long as the system is 
 imposed upon them from above, it must fall far short 
 of man's ideal destiny. "A place for everyone and every- 
 one in his place " is a well sounding motto ; but to find 
 a man's true place in the world is not for officials and 
 super-men but for each man himself ; he can find it 
 if he cares to, and nobody else can find it for him. 
 
 Organisation however is not perhaps the peculiar 
 vice of our English industrial system ; it is certainly 
 not too much of a machine, but I am not sure that it 
 is not something almost as bad. Its development has 
 not been made under the guidance of officialdom, it 
 has sprung up at haphazard like the growth of a 
 primaeval forest, and its loose entangling network clogs 
 and hampers the tender plant of industrial liberty. 
 We boast that Englishmen are free because of the 
 absence of compulsion ; but the truth is that though 
 they are not slaves of a system they are none the less 
 the slaves of circumstances and chance ; and in that 
 there is small ground for pride. Millions, as things 
 are, have no real freedom in their choice of a profession. 
 Our workshops are full of square pegs in round holes, 
 and round pegs in square holes. A child born in the 
 potteries is marked down from birth to follow in the 
 family tradition. May be that his whole interest lies in 
 plants and horticulture, and that he would make an 
 admirable gardener ; but in the workshops he is 
 
66 NEW FALLACIES OF MIDAS 
 
 secure of a living and to strike out a line of his own 
 would be too hazardous an adventure. So lads are 
 taken from school at fourteen and saddled for life with 
 occupations for which they have neither aptitude nor 
 taste. Once settled in a job, he will be a bold man that 
 will leave it. If he cuts adrift from the one business 
 which he understands, he has not the means or oppor- 
 tunity to learn another ; and a meagre livelihood by 
 unskilled or casual labour is the sole alternative to 
 unemployment. As compared with him the labour of 
 Morris's Utopia is as a freeman to a slave. He is free 
 to choose his occupation, to take a job or leave it, to 
 work long hours or short ; and in such liberty he finds 
 not an excuse for idle sloth but a spur to more willing 
 energy. He may be poorer and he may be less efficient, 
 but there can be little doubt that he would be the 
 happier man of the two. For only that man is truly 
 happy who has realised himself to the full in his life's 
 work ; and if we do indeed believe that each individual 
 human being has a worthy place to fill in the world and 
 a self to realise therein (which is only another way of 
 saying that Providence understands its business), then 
 we must allow him some more real freedom of choice 
 to find that place and fuller opportunity to use it. 
 In our perfect society nothing short of complete eman- 
 cipation from the tyranny of systems and from the 
 entanglement of chance must be our ultimate ideal. 
 
 To consider by what precise steps that ideal may be 
 reached is not here to our purpose ; but it is perhaps 
 necessary to repeat that legislation . and officialdom 
 alone will never achieve it. Indeed many of our 
 modern reformers seem to be heading in the wrong 
 direction ; in their zeal for efficiency at any price, they 
 have been too ready to imitate German methods. 
 They would make it the State's business to lead up the 
 child in the way he should go ; they would provide 
 offices where his capacities could be tabulated and 
 
UTOPIA 67 
 
 his record pigeon-holed, and officials who would find 
 him a place, train him to be fit for that place, and, 
 whether he liked it or not, put him into that place, as 
 though he were all the while not a human being with 
 tastes and feelings of his own, but simply a pawn for 
 bureaucrats to play with. But though bureaucracy 
 is at all costs to be avoided, modern society could 
 hardly exist without some regulation of industry. 
 There must be opportunities for technical training and 
 specialised education, public channels of information, 
 and organised facilities for the free movement and 
 distribution of labour ; without these it would be just 
 as impossible to find work suited to every kind of person 
 as to find persons suited to every kind of work of the 
 community. It is not enough to assume that different 
 persons will have different gifts and different tastes, we 
 must also devise methods whereby to discover these 
 gifts in individuals and to draw them out where they 
 are latent. Above all, we shall need the discipline 
 of education to cultivate in men a high sense of duty 
 and public service ; for it is only in obedience to these 
 higher motives that they would voluntarily undertake 
 the more arduous and thankless forms of labour. Nor 
 will Education be needed only to train men in the 
 right choice and right use of a profession. We must 
 educate the public that consumes as well as the workers 
 that produce ; for, unless there is a general demand for 
 work of the right sort, it is useless to expect that the 
 right sort of work will be done. Therefore if the pro- 
 ducer's interests are to be safe-guarded, there must be 
 a corresponding adjustment of the consumer's tastes. 
 Before we can render the former's work a more human- 
 ising and inspiring business, the latter must be prepared 
 to make some sacrifice, and to pay the cost of such a 
 change. For cost there must certainly be — and 
 Morris's shrewd insight has not missed it. 
 
 Life in the ideal society which Morris pictured is 
 
68 NEW FALLACIES OF MIDAS 
 
 marked above all by an austere simplicity of taste. 
 His imaginary people take no pride or pleasure in the 
 multitude of their possessions ; we find among 
 them none of the artificial refinements and elaborate 
 mechanism of luxury and comfort, with which writers 
 such as Mr. H. G. Wells have chosen to endow 
 posterity ; indeed we shall find little enough of the 
 cheap abundance and pretentious splendour which is 
 the peculiar boast and passion of our own age. In 
 Utopia there would be less finery, less furniture, less 
 paraphernalia of comfort and convenience. 
 
 But would that after all be any great loss, provided 
 that what there was were good ? More than ever are 
 we now tempted to spend money on that which is not 
 bread, whether as food for the body or food for the 
 mind. Such a multitude of new pleasures and novel 
 playthings are now within the grasp of all that rich 
 and poor alike are beginning to lose their sense of values, 
 and to abandon themselves to a materialistic view of 
 life, and to confound happiness with pleasure. What 
 is it, after all, that makes true happiness ? Is it much 
 and cheap, or little and good ? Is it the flaunting 
 fashions of novelty and change, or the same old 
 pleasures that men of all times and places have 
 enjoyed ? Is it a flood of cheap magazines and picture 
 papers and sixpenny novels or the well thumbed 
 volume of Shakespeare, Tennyson or Scott ? Is it a 
 set of hand-made ware, turned by a craftsman and 
 treasured through a life- time or is it half-a-dozen cheap 
 tea-services broken by as many house-maids in 
 succession ? Is it a country walk and a bed at the 
 inn, or a whirligig tour through six counties and the 
 make-believe comfort of pretentious hotels ? Is it 
 a dance on a village green to the tune of a song or a 
 fiddle, or is it the discordant mimicry of the gramo- 
 phone and the fevered sensations of a picture palace ? 
 The true secret of combining poverty and happiness 
 
UTOPIA 69 
 
 it may yet be ours to discover. Yet it is no new 
 secret. The Athenians were perhaps the first to find it 
 out and I am not sure that it did not die with them. 
 It was Pericles who summed it up in his single 
 phrase, cf>iXoKaXovfi€v iier evreXeia^, taste and economy 
 combined in one ; love of all in the world worth 
 loving* and the simple life. This is what Mr. 
 Zimmern has to say of that ideal in his book " The Greek 
 Commonwealth." " Greek Literature, like the Gospels, 
 is a protest against the modern view that the really 
 important thing is to be comfortable. The comfort 
 promised by the Gospels (and that enjoyed by the 
 Greeks whether the same or somewhat different), and 
 the comfort assured by modern inventions and 
 appliances are as different as ideals can be. We must 
 imagine (he continues, speaking of the civilisation of 
 the ancient Greeks) houses without drains, beds 
 without sheets or springs, rooms as cold or as hot as the 
 open air, only draughtier, meals that began and ended 
 with pudding, and cities that could boast neither 
 gentry nor millionaires. We must learn to tell the 
 time without watches, to cross the rivers without 
 bridges and seas without compass — to study poetry 
 without books, geography without maps, and politics 
 without newspapers. In a word (if we are to realise the 
 Greeks) we must learn how to be civilised without 
 being comfortable. We must go behind the Industrial 
 Revolution. The older Greeks did not want to be 
 rich for the sake of riches. They only desired riches 
 when they had convinced themselves that riches were 
 necessary to social well being. They knew, as some 
 Eastern people know still, that " a pennyworth of ease 
 is worth a penny," and that it is not worth while 
 spending two pennyworth or more of worry and effort 
 to attain it. That is precisely the spirit of Morris' 
 
 * The Greek word Ka\6s implies so much besides aesthetic beauty 
 that it is impossible to find one English word whereby to render it. 
 
70 NEW FALLACIES OF MIDAS 
 
 Utopia, and what its lesson may be for the world of 
 to-day is well worth consideration. Perhaps neither 
 Morris nor the Greeks were very far from the truth. 
 
 First of all then, in our pursuit of social happiness, 
 we shall consider, not whether a thing is desirable to 
 consume, but whether it is desirable to produce, and 
 when Morris said that there are some pieces of work 
 too disagreeable or too troublesome to be worth while 
 performing, we shall agree with him. No man has the 
 right to endanger the lives or health or happiness of the 
 workers for his own selfish ends ; and the sooner we 
 cease to do so the better for their welfare and for our 
 own peace of mind. In this matter indeed the con- 
 sciences of men have been a little stirred already. We 
 do not now send women down coal-pits, or employ 
 children of tender age in factories. Laws have been 
 passed restricting or forbidding some dangerous pro- 
 cesses, and insisting on healthier conditions for others. 
 Because pottery-making of the normal type is injurious 
 to the workers, the public is encouraged in the use of 
 pottery with a leadless glaze. But, as a rule, we 
 enquire too little into the circumstances of manufacture, 
 and do not care to be told that our pet luxury is pro- 
 duced at the cost of the happiness of somebody else. 
 
 Furthermore, we shall consider not only what 
 character of work is most injurious but what work 
 is most beneficial to perform ; and here too Morris, 
 I think, struck the right note, in insisting on the 
 superiority of work done by hand over work done by 
 machine. If such work is more costly to produce, its 
 greater permanence and artistic value is more than 
 sufficient compensation ; and while the worker gains 
 in the truer pleasure and interest of producing it, the 
 consumer also gains a truer satisfaction from the 
 product of the other's enthusiasm. None the less it is 
 more than a little doubtful whether we can afford to 
 dispense altogether with machinery, unless indeed we 
 
UTOPIA 71 
 
 are prepared to put back the clock a hundred years and 
 to forgo three quarters • of our present prosperity. 
 Arts and crafts may already be receiving more recog- 
 nition and encouragement, and agriculture may be 
 restored to its rightful place in our national life ; but 
 for the most part Morris's ideal must be acknowledged 
 to be impracticable. Machinery has come to stay ; 
 and our business is not to put the clock back but to put 
 it forward, not to abolish machinery but so to develop 
 and perfect its uses that the grinding monotony and 
 discomfort of the machine minder's work may be as far 
 as possible relieved and lightened. Mechanical science 
 is already making great strides in this direction. Until 
 recent years for instance, the cotton spinning machine 
 was so arranged that if a single thread snapped, the 
 spinner was forced to stop the machine by hand and at 
 infinite pains uncoil the threads in order to recover 
 the broken end. Now the machine is automatically 
 stopped directly the break occurs ; and the saving of 
 time and trouble to the spinner may well be imagined. 
 And other inventions and improvements of the sort 
 will do much to ease the workers' burden, and after 
 all, monotony is not confined to the process of 
 machinery ; there is Hood's poem to remind us that 
 purely manual labour can also be monotonous, and 
 that there is no slavery like the slavery of the seam- 
 stress. A machine minder whose business calls for 
 some technical knowledge and a skilful hand with 
 screw-driver and bolt, may well take a real pride and 
 pleasure in the manipulation of his engine. The chief 
 source of weariness arises from the absence of variety 
 and change, and for this the remedy is not far to seek. 
 In some countries it has been already applied, and 
 instead of keeping one man or woman to the continuous 
 performance of a single process, employers allow them 
 to go the round of the shops, thus keeping alive an 
 interest in their work and increasing their efficiency to 
 
72 NEW FALLACIES OF MIDAS 
 
 boot. Yet there must remain some kinds of 
 labour whether done by machinery or hand which are 
 too wearisome and soulless for a life time's work, and 
 wherever improved machinery cannot provide a 
 solution of this problem, it is not impossible that 
 Morris's suggestion might hold. The young and 
 stalwart might be drafted into such labour for a year 
 or so at a time ; and the time thus spent on the roads 
 or in the mines would be no bad discipline and training. 
 Ruskin once led out a band of undergraduates to make 
 a road near Hinksey, and a very bad road they made 
 which remains there to this day. But they enjoyed the 
 experience ; and such labour would perhaps be no 
 more irksome than the military training which most 
 countries now enforce. 
 
 Last and not least, work which takes too much of a 
 man's time is almost as seriously to be condemned as 
 work which is downright unhealthy, unwholesome 
 and monotonous. To spend, as many labourers do 
 to-day, twelve or more hours out of the twenty-four 
 on work which simply exhausts the body and does not 
 exercise the brain, is not the purpose for which man 
 was made. The people of Nowhere, we may note, were 
 a leisured people. They could find time (as perhaps 
 men should), to leave their bench for a gossip or to 
 drive a neighbour into town. But, what is more, they 
 knew how to use their leisure well ; and this is a side 
 of life which we to-day neglect too much. It is no use 
 pleading for an eight-hour or six-hour day for all 
 (and with the rapid improvement of machinery this is 
 not beyond the realm of reasonable prophecy) unless 
 the time so saved is well used and not wasted. Here 
 again the true solution lies in a wider and deeper 
 development of Education, not Education of the schools 
 only, but such as will not cease at fourteen nor at 
 eighteen nor even at twenty-three. Such modern 
 movements as the Workers' Educational Association 
 
UTOPIA 73 
 
 have shown already what can be done among the adult 
 workers, and have discovered among the unlearned 
 artisans an intellectual energy which puts the cultured 
 class to shame.* We may, as yet, have no dustmen who 
 write novels ; but tramps and sailors do ; and the days 
 may yet be coming when rustic Shakespeares will 
 write tragedies and act them on village greens, when 
 coal-heavers and chimney-sweeps, their day's work 
 ended, will sit down to study algebra or natural 
 history, or to carve themselves a sideboard or a mantel- 
 shelf, when in short, a man's true life will centre in his 
 voluntary and not in his necessary labour, in what he 
 does for the love of it, and not in what he does to earn 
 his daily bread. 
 
 Yet it must not be lightly assumed that the ideal 
 which is here foreshadowed would impose less tax 
 upon man's energies as a whole, or that simple tastes 
 are altogether easy tastes to satisfy. The unpre- 
 tentious beauty of plain dresses or simple furniture 
 is often the most expensive to procure ; it costs a far 
 greater effort to paint by hand a single masterpiece 
 than to turn out half a million of cheap prints, or again, 
 it is easier to erect a row of mansions upon a uniform 
 and settled type, than to build a cottage which will 
 combine the highest ideals of utility and beauty. So, 
 before the simple life can also be the happy life, we must 
 plan its smallest details with elaborate care, eliminating 
 needless labour by all manner of devices, and adapting 
 every article of use to the most eihcient performance of 
 its function. And, whatever its difficulties, the task 
 will be worth while ; for the consumer no less than the 
 producer it is from the simple rather than the complex 
 that the highest satisfaction is to be gained. In life, 
 
 * The W.E.A. is an organisation of 200 branches, which provides of 
 weekly lectures and debates for 11,000 working men and women. 
 It is undoubtedly one of the most striking educational experiments of 
 history. 
 
74 NEW FALLACIES OF MIDAS 
 
 as in art, elaboration is only a step towards a new and 
 grander simplicity of design ; for complexity of itself 
 cannot bring satisfaction ; harmony and harmony alone 
 can bring us that. Now modern life is not harmonious ; 
 in innumerable ways its various sides conflict with one 
 another. The town- dweller who has a taste for natural 
 beauty, must make a tedious journey in an unsightly 
 train before he can gratify his taste ; does he crave 
 mental relaxation, he must take his place among a 
 crowd of strangers in the restless glare and tainted 
 atmosphere of a concert-hall or theatre ; or is it merely 
 a matter of reaching his home at night, he must travel 
 in a subterranean railway and be hoisted up to the 
 fifth storey flat in a jerking lift. In other words the 
 means of satisfaction are very ill-adapted to the end. 
 But in Utopia all this would have been changed ; its 
 citizen will find natural beauty in the garden lying at 
 his own front door ; music and other arts he will enj oy 
 in the company of friends, relying (for in Utopia artists 
 will be numerous) upon the resources of his own or 
 others' skill. When his work is over, he will still have 
 the zest and vigour to return on foot to a house of 
 moderate size which at least he can call his own. In 
 the quest for happiness this present age employs a 
 thousand make-shifts* that satisfy no one, and explores 
 
 * In many respects, however, we are heading in the right direction, 
 for we are all the while getting more simplification along with greater 
 complexity. Let me take an instance. The roll-top desk at which 
 I write is far more simple whether to make or to use than the bureau 
 in the next room. In the bureau the drawers work stiffly : and seeing 
 that they are of all shapes and sizes, the maker must have constructed 
 each at haphazard as he went along. The drawers of the desk on the 
 contrary are all made upon a fixed standard of measurement, and they 
 perform their function to perfection. The result is an economy of 
 labour both for the craftsman and for the writer. But the roll-top desk 
 is out of harmony with the other furniture being ponderous and 
 unsightly. The labour saved by superior methods of construction 
 might therefore have been expended to advantage, if more trouble 
 and thought had been given to the proportions and appearance of the 
 desk. In Utopia bureaux will be as serviceable as roll-top desks, and 
 roll-top desks as beautiful as bureaux. 
 
UTOPIA 75 
 
 a thousand tracks which lead it nowhere. But when 
 men come to understand both what their true needs are, 
 and by v/hat means those needs can best be satisfied, 
 then it will be strange indeed, if the complex civilisa- 
 tion in which we live has not been superseded by a 
 simpler and more harmonious way of life, in which the 
 needs that men feel are fewer,the means to their satisfac- 
 tion more direct and so the resulting happiness more 
 lasting and complete. 
 
 (iii.) 
 
 To ourselves, living as we do in the midst of so much 
 strife and self-seeking and distress, William Morris' 
 ideal may well seem too daring in its aspirations, and too 
 visionary in its almost childlike faith in human virtue 
 and human happiness ; yet no ideal would be worth 
 having that was otherwise. If we set our compass 
 lor the Happy Isles, it is not with the expectation of 
 arriving there to-day, nor yet to-morrow. It is 
 enough to know that there lies our goal, and to be 
 assured that at least we are not steering direct for their 
 antipodes. If such a society as Morris pictured could 
 ever be realised on this earth, it certainly will not be 
 reached at a single bound ; and granted that we step 
 by step are moving in the right direction (and in many 
 ways we have some reason to suppose that we are), 
 that is at once both a ground for optimism and a proof 
 of Morris's farsightedness. There is, however, one side 
 to his system to which I have hitherto made no allusion. 
 Among the people of his ideal there was no money, no 
 private property, no trafficking for gain ; they were 
 Communists out and out. When, for example, the 
 Guest asked a shop-girl for tobacco, she pressed upon 
 him a pouch and a pipe as well ; yet would not take a 
 penny in return. In short, the citizens of Nowhere 
 laboured their hardest and gave their best, careless 
 
76 NEW FALLACIES OF MIDAS 
 
 whether they should receive as much again. Here 
 indeed is a way of life so utterly strange and foreign 
 to our own habits, that we feel as though the ground 
 on which common mortals tread had been swept away 
 from beneath our feet. Of Morris's other notions we 
 found some at least to be not utterly impracticable and 
 some to be partially realised already. But this is a 
 transformation of human character, of which in Morris's 
 day at any rate the world contained no promise, 
 hardly even the shadow of a hint. There was never 
 a time when business was more keen or competition 
 fiercer. Even to-day, though ideals are swiftly 
 changing, money is still the standard of success, and the 
 passport to social or political advancement. Private 
 property and the principles of credit and exchange are 
 still the very corner-stones of our social and economic 
 edifice. 
 
 Hitherto throughout the preceding chapters of this 
 book, we have considered the world, not as a compound 
 of warring and jealous elements, but as though it were 
 one great family, confronted with the single problem of 
 supporting life, and meeting it with a united effort 
 and a common will. But, look at the world how you 
 will, this is not the actual condition of affairs. You 
 will not find unity and mutual service, but division and 
 self-interest ; not generous emulation, but bitter 
 rivalry ; not co-operation but suicidal competition. 
 Commerce is a battle in which tradesman is matched 
 against tradesman, merchant against merchant ; and 
 every man's hand is against his neighbour, nor does 
 the antagonism stop with individuals ; whole classes 
 are now set at variance, and are busy marshalling their 
 legions for the fight. Artisans have combined to 
 challenge the power and authority of the capitalist, 
 and the capitalist on his part is not minded to yield 
 without a struggle. Nations too are entering the lists ; 
 and economic warfare is invoked to finish the work 
 
UTOPIA 
 
 11 
 
 begun by battle-ships and cannon. The principle of 
 Free Trade at least put the produce of each nation at 
 the service of them all, thus leaving every country to 
 make that contribution to the common stock which the 
 abilities of its people or the resources of its land best 
 fitted it to make. But the nations would not have it 
 so ; and must needs set up protective tariffs, and each 
 seek prosperity behind the artificial stronghold of its 
 own ring-fence. 
 
 Now in Morris's tale there were neither national 
 frontiers nor national causes and much less national 
 feuds. Each country lived with its neighbour as 
 peacefully as England lives with Wales, and there were 
 indeed no national governments to pick a quarrel, nor 
 national causes for quarrel. And when this is said, it 
 is plain that we must here part company with this 
 romantic dreamer, for events have happened since his 
 day which he would have deemed incredible, and 
 between our world and his Utopia there is fixed a gulf 
 wider than theories or prophecies can bridge. 
 
PART II. 
 
 Chapter VIII. 
 
 VALUE. 
 
 It is the business of all good prophets to dream dreams ; 
 and pleasant rosy-coloured dreams let them by all 
 means be, if they can give us better hopes for our own 
 happiness or a better confidence for the future of the 
 world. The economist's business is more prosaic. He 
 must face the facts, whether pleasant or unpleasant, and 
 take the world as he finds it. Men are not all saints or 
 archangels as yet, and that they will ever be so appears 
 in the last degree unlikely. In the meantime, to us of 
 the twentieth century, the moneyless country of 
 Morris's imagination seems as fantastic as a scene out of 
 fairyland. We should be as little surprised to meet a 
 giant marching down Watling Street in seven-league 
 boots as to find a tobacconist who would lavish pipes 
 upon us gratis. Such disinterested generosity is not 
 the way of the world as we know it ; and just as men 
 and women bought and sold in Noah's day, so they 
 have been buying and selling ever since. Only once 
 and again throughout the course of history have there 
 been brief departures from this universal code of 
 commerce. The early Christians, to name one of 
 them, " had all things in common " (though even they 
 sold their goods without compunction to those who 
 were not of the faith). Once too, on the inhospitable 
 coasts of New England, our Puritan settlers made a 
 similar experiment. It ended in utter failure, and not 
 until this quixotic policy had been abandoned, did the 
 
 79 
 
8o NEW FALLACIES OF MIDAS 
 
 colony begin to thrive. Other attempts, whether due 
 to religious zeal or philanthropic enthusiasm have had 
 no better success ; they have lingered for a time and 
 passing have left no mark upon the world. After two 
 thousand years of Christianity, the society for which 
 Morris wrote was more and not less the slave of 
 money, than were the societies that had gone before. 
 Men were governed, not by the precepts of the Sermon 
 on the Mount, but by the rules of high finance. Their 
 gods were not the kindly spirits of benevolence and 
 mutual service ; they were the grim deities of com- 
 petition and distrust ; their temple built upon a 
 foundation of hard cash ; the victims sacrificed at 
 their altar dupes, bankrupts and ruined creditors ; 
 and written large across its stones the uncompromising 
 legend, " Nothing for nothing here, and precious little 
 for sixpence." 
 
 And as yet, all this is not greatly changed ; so that, 
 for the present, it would appear, and on into the 
 future as far as most of us can see, we must accept this 
 as the rule of human action, that men will give only 
 upon the condition that they shall receive at least as 
 much again. Whether it be goods or money or services 
 that we offer to our neighbour, we are never satisfied 
 with less than an equal value in return (or, what, at 
 any rate, appears to ourselves equal value ; for even 
 poor Moses Primrose imagined in his folly that his 
 gross of green spectacles was a capital bargain for his 
 horse). Whenever then two men strike up a bargain, 
 and agree to an exchange of goods, each of them is 
 parting with something that he has, in order to acquire 
 some other thing that he has not ; and whether he be 
 satisfied or no with the terms of the bargain, he must 
 assuredly believe that what he gains by the acquisition 
 compensates to him at least for what he gives up ; else 
 as a free agent, and possessed of his proper senses, he 
 would never have concluded the bargain at all. He has 
 
VALUE 8i 
 
 weighed the balance of advantage in his mind and has 
 not found it wanting. In every act of barter, such 
 an equation or balancing of values is implied ; and 
 before we can grasp the meaning of exchange, we must 
 decide what value is. — ^ 
 
 Value is a term common enough in daily use ; yet/^v^ 
 as in the case of wealth, it is none too easy to define. 
 One thing however we may state at once. Value is not 
 an absolute or permanent quality in things. A thing 
 ceases to have any value, as soon as men cease 
 altogether to want it ;* the picture which to-day 
 fetches a thousand pounds at Christie's, may a century 
 hence be consigned to the lumber room as rubbish. 
 Values change as men's tastes change ; and different 
 people set different values upon the self-same thing. 
 Thus the famous pills which in the maker's own estimate 
 are well worth a guinea a box, are to be bought at any 
 chemists for the sum of thirteen pence. Nor for that 
 matter must it be concluded that money is a true 
 measure of value. For the value of gold and silver 
 itself changes and has fluctuated in the course of a 
 thousand years far more than the value of the German 
 mark has changed in the course of three. In Solomon's 
 time the very abundance of silver sufficed to make it 
 cheap ; and in our own day the same influence is still 
 at work. Silver having become a drug on the market, 
 a currency such as the Chinese tael has depreciated 
 accordingly ; and financiers tell us that the same is true 
 (though less decisively and less continuously) of gold, f 
 At best we can but say that the value of these rarer 
 metals is the least liable to change, and that therefore 
 
 * It may of course retain a potential value, but what is merely 
 potential is not fact. 
 
 f To be exact, the influence of gold production upon prices does not 
 proceed directly from the law of supply and demand ; but is due 
 to the effect which an increase of currency has upon credit, that is, on 
 men's com-mercial confidence. Other factors may therefore enter in 
 which will restore prices to their previous standard. 
 
82 NEW FALLACIES OF MIDAS 
 
 we have in them a convenient and fairly stable standard 
 by which to measure other values. 
 
 For value itself, like height or weight or solidity, 
 is merely a measure by which two or more different 
 things can be compared. When, for instance, we say 
 that a motor-car is cheap, we are making a mental 
 comparison with other motor-cars which are dear ; 
 or when we speak of precious stones we are thinking, 
 though we may not know it, of other stones which are 
 not precious. More especially is a comparison implied, 
 when we come to make an actual purchase or exchange ; 
 for then a positive and concrete value is assigned to 
 what we buy ; and a definite preference for one thing 
 over other things declared. A simple illustration will 
 make this clear ; and (since the intrusion of money only 
 serves to obscure the issue), let us take the illustration 
 from a country where the use of money is unknown, and 
 where all trade is done by barter. Let us suppose then 
 that a native of this benighted country proposes to do 
 a day's work for a neighbour. In return for this 
 service he expects of course some definite reward ; but 
 what reward he will receive is within certain limits a 
 matter of his personal choice. It is open to him let us 
 say, to demand a loaf of bread, or a pair of chopsticks 
 or a nose-ring or an assegai, and much else besides. 
 After due reflection he elects the nose-ring and 
 thereby he declares his preference for this particular 
 satisfaction as against other alternative satisfactions 
 not excluding the satisfaction of taking a holiday and 
 doing no work at all. If the neighbour agree to the 
 deal, and the bargain then goes through, he has given 
 both to his day's work and to the nose-ring a value 
 relative to all rival satisfactions that lie at his comm.and. 
 Now, in every act of exchange the same takes place. 
 A comparison is proposed ; a preference is declared. 
 By the sum-total of all such declared preferences tne 
 world's scale of values is formulated ; yet in everj/ fresh 
 
VALUE 83 
 
 declaration of preference the scale of values is mentally 
 revised, weighed in the balance and fixed, as it were, 
 anew. 
 
 Now, if the preferences of men were stable 
 and constant, values would be constant too ; but values 
 are variable, as anyone can see ; and for the simple 
 reason that preferences are also variable. Why prefer- 
 ences should so vary, it must now be our business to 
 inquire. 
 
 Let us take an illustration once again. It is my habit 
 (being a man of simple tastes) to drink water from the 
 local spring, and every day I journey thither to fetch 
 a pailful and supply my want. In other words I prefer 
 the trouble of a single journey (but not more than a 
 single journey) to the pain of leaving my thirst unsatis- 
 fied. Now there comes a hot summer ; my thirst 
 increases ; and I decide that it is worth while to fetch 
 two pailfuls from the well instead of one ; so it requires 
 a double journey and a double sacrifice of energy and 
 time to allay my tiresome thirst. In short, because my 
 desire is more intense its satisfaction costs me dearer. 
 As however the season advances, a drought sets in ; 
 and when at last the cooler weather has returned, I find 
 my well dried up. I am now content with a single 
 pailful, but I must travel twice the distance to reach the 
 nearest spring. Once again the satisfaction of my 
 want is attained at tv/ice the former cost ; but this time 
 it costs me more because it is more difficult to supply. 
 In both cases I prefer the alternative of a double journey 
 to the pain of unsatisfied thirst. The cause in the one 
 case, is an increased desire, the cause in the other an 
 increased difficulty of supplying it. Here then, are 
 two different influences at work, the influences of 
 Demand and Supply, and it is by balancing these two 
 influences in the mind the one against the other, that 
 all preferences whatsoever are determined. In other 
 words, when I know how much I want a thing, and 
 
84 NEW FALLACIES OF MIDAS 
 
 also how hard it is to get it, I know just what it is 
 worth to me. Then I can say " so much labour I will 
 give for it or so many pence, but not a stroke of labour 
 or a penny piece more." 
 
 Value then is fixed by the interplay of these two 
 factors, supply and demand. Neither of them is alone 
 sufficient to determine the value of a thing. Intensity 
 of desire will not of itself make a thing dear. The 
 strongest desire which can exist in man is the desire 
 for food ; yet food is cheap compared with diamonds, 
 simply because to supply the one is easy, to supply the 
 other difficult. Nor on the other hand are difficulties 
 of supply enough to raise the value, if the demand is 
 wanting. The first edition of some obsolete epic 
 may be as rare as diamonds, and, if there were a large 
 demand for the books, it could never be supplied. But, 
 since nobody has much interest in possessing them, they 
 are priced at half-a-crown and placed on the book- 
 seller's back-shelves. From these two instances it 
 should be clear that value is fixed not by supply alone 
 nor by demand alone, but by both in combination. 
 They are complementary to each other like the two 
 scales on a sliding-rule. On the one side, value has a 
 tendency to rise as demand goes up, and to fall as 
 demand goes down ; on the other side it is exactly 
 the reverse. And the actual price that a man will 
 pay, is determined by the point at which the two scales 
 meet. For then the measure of his desire is exactly 
 equated to the measure of his sacrifice ; the satisfaction 
 coincides with the trouble that it costs.* 
 
 In the world's markets, just as in the individual's 
 case, the twofold influence is constantly at work. 
 
 * It is of course true that when I buy a ton of coal, the trouble of 
 procuring it is not mine but the collier's. But, it must be remembered 
 that I give him something for the coal, and, in the last resort, this must 
 represent an expenditure of energy on my part which in some way is 
 equivalent to his. The case of enjoyment which I do not earn by 
 personal trouble shall be considered hereafter. 
 
VALUE 85 
 
 There the sum-total of the producers' difficulties 
 regulates the amount of the supply, while the sum- 
 total of the consumers' desire for satisfaction regulates 
 the intensity of the demand. But because production 
 depends on human energies, and consumption on 
 human desires, and because desires and energies react 
 upon each other, there is a corresponding interaction 
 between the amount of supply and the intensity of 
 demand. If supply increases, demand is almost sure 
 to follow suit. When the price of tea is half-a-crown, 
 my monthly allowance is no more than a pound ; but 
 when tea is plentiful and the price falls to one and six, 
 I shall double my allowance and thus my demand will 
 have increased, the cost of its satisfaction being enlarged 
 to the length of sixpence. In the same way demand 
 will have its influence on Supply. When the manu- 
 facturer perceives that the public wants more boots 
 than it actually gets he does not maintain his out-put 
 at its former level and take advantage of increased 
 demand by putting up the price, he will augment his 
 out-put even though the increase of supply will lower 
 the value of the boots. So in general the best way to 
 stimulate production is to increase consumption, and 
 the best way to stimulate consumption is to provide 
 men with plenty to consume. To the action and 
 reaction of these two complementary economic forces 
 there is no discoverable end. 
 
 There is however a tendency in human nature 
 (common both to producers and consumers alike), 
 which in some measure limits and impedes the natural 
 and free development of these economic laws — I mean 
 the tendency to standardise values. A doctor's fee 
 is a guinea and neither more nor less, whether I call 
 him in to save me from death by poison or to lance a 
 painful corn. Books of the same quality and size are 
 more in demand at London than they are at Manchester, 
 bicycles may be are bought more freely in Denmark 
 
86 NEW FALLACIES OF MIDAS 
 
 than they are in Sweden ; yet the price remains the 
 same in one place as in the other*. Or again, a lady 
 who goes shopping will refuse an article the price of 
 which has risen, not be cause the price is beyond her 
 purse, nor because it is more than the article is worth to 
 her, but simply because she regards the price as unusual, 
 exorbitant, unfair. In one and the other case, the 
 producer or consumer is endeavouring (for whatever be 
 his or her own reason) to maintain prices at their normal 
 level. Partly perhaps, this tendency is due to an 
 innate conservatism which clings to the conveniences 
 of custom ; for men are the slaves of habit, and will 
 continue to charge a price or accept a wage, long after 
 the wage or price have lost all relation to the actual 
 conditions of supply and demand : but even more it is 
 due, I think, to a sense of corporate loyalty, a certain 
 esprit de corps, which will not allow a man to outbid 
 or undersell his neighbour. When the village milkman 
 refuses to take advantage of a local and temporary 
 scarcity of milk it is because his sense of decency forbids 
 the exploitation of his neighbour's need. For a 
 similar reason he does not try to increase his custom 
 by lowering the price of his butter simply because he 
 does not wish to steal a march on rival farmers. 
 
 Let us not be mistaken. Values are fixed and 
 preferences determined not by soulless cipher-mongers 
 and abstract formulae, but by human beings with 
 human virtues as well as human weaknesses. Ex- 
 changes are not always made (as some theorists 
 have fancied) in a spirit of calculated self-interest and 
 cold intelligence. In business, as in other spheres of 
 life, men are swayed by a variety of passions, fancies and 
 ideals. These have their origin in part in the defects of 
 our wisdom or our will ; such are the errors of a hasty 
 
 * If we allow for the addition to the price which is due to the cost 
 of transport, this standardisation of prices would be found to have a 
 far wider application than might at first appear. 
 
VALUE 87 
 
 or deluded judgment, baseless fears of scarcity or hopes 
 of plenty, imaginary doubts of others' honesty or 
 unreliective assurance of our own, easy-going adher- 
 ence to fashion, custom or tradition, love of notoriety 
 or dread of public censure. Other motives are more 
 worthy ; pride in good craftmanship, sense of honour, 
 loyalty and fair-play, even the softer impulses of 
 charity and pity ; these also play their part. There 
 are a thousand springs of human action which defy 
 scientific analysis, and interfere with the working of 
 purely economic laws. And indeed, when we speak 
 glibly of a " fair price '* or a ** just wage " v^e little know 
 how much is presupposed in such a phrase. To assess 
 the ideal value of a single thing would call in reality 
 for a man possessed not only of perfect taste, but of 
 complete omniscience and absolute integrity as well. 
 Even then it must not be forgotten that it takes two 
 to make a bargain, and if a pair of such paragons were 
 ever found, they would probabl}^ prefer the more 
 generous methods of the Utopian people or of the 
 Early Christian Saints. 
 
 Nevertheless we know that with the best will in the 
 world no modern state or society could exist for a day 
 upon that simple-minded pattern; The working of our 
 industries and great commercial houses by which 
 crowded cities and scattered colonies are now supplied, 
 would be impossible without the widespread net- 
 work of credit and exchange which is the arterial 
 system of the economic world. And, were sorae 
 sudden catastrophe or revolution to destroy credit 
 and check the flow of markets, then disaster would 
 as surely follow as death must come to the body 
 when the circulation of the blood is stopped. Exchange 
 then must continue, if men are to live in decency and 
 comfort ; and for a standard of exchange we must 
 further have money tokens. So long therefore as 
 this is the way of the world, men will retain their 
 
88 NEW FALLACIES OF MIDAS 
 
 power to profit by each other's ignorance or need; 
 salesmen will be able to' exploit their customer's 
 credulity ; in every deal there will be opportunity 
 to haggle, bluff and over-reach. Yet in the long run 
 such methods will bring no permanent advantage; 
 they are bad business as well as bad morality ; and 
 immediate gains can never compensate for a tarnished 
 reputation. For at bottom all trade is built upon 
 a basis of mutual trust and reciprocal good- will. 
 The more each party to a bargain is persuaded of the 
 other's honesty of purpose, the more willing will each 
 be to make the venture, and thus the more will the 
 volume of the trade swell and prosperity be increased. 
 Men will naturally prefer to deal with those who make 
 it a point of honour to give value for value, laying all 
 their cards squarely on the table, and offering their 
 goods for precisely what they are. Nor will the fair 
 minded man of business seek to conceal his profits (not 
 even from the men whom he employs) ; for the profits 
 he demands will be in accordance with the services 
 he has rendered and the risks he has run. There can, 
 it is true, be no hard and fast canon of economic 
 justice ; but equity there certainly can be. Given 
 sufficient knowledge, we can tell what price is fair 
 and what unfair, what profits are reasonable, and 
 what are not. This is a truism to-day. The last 
 half century has witnessed a great change in the ethics 
 of the markets ; " caveat emptor " is now a discredited 
 motto ; open dealing and frank publicity is the recog- 
 nised code of all reputable traders, nor is there any 
 lack of generous or even altruistic effort in the business 
 world. Yet much remains of which we have small 
 reason to be proud. Profiteering which is discoun- 
 teranced in war-time, is still considered by many to be 
 legitimate in peace. There is plenty of dissimulation and 
 sharp practice which is every whit as vicious as open 
 fraud. But, though money must for all time be the root 
 
VALUE 89 
 
 of many evils, it is not by abolishing money that we can 
 hope to be rid of them. The old rules of commerce 
 must still stand; only they must be observed in 
 the spirit of liberality and fair deaUng, rather than 
 according to a niggardly interpretation of the letter. 
 We must substitute a positive zeal for justice where 
 we have been content in the past with a negative 
 avoidance of its breach. 
 
Chapter XI 
 
 MONOPOLY. 
 
 The mathematical novice, who aspires to probe the 
 mysteries of gravity and motion, is introduced at the 
 outset of his studies to a strange world, in which 
 ponderous bodies glide and swing untrammelled 
 through spaces completely innocent of friction. But, 
 mathematics being as it is an abstract science, the theory 
 of dynamic laws fits very ill with fact ; friction exists 
 in all known spaces and in all known things ; and the 
 movements of natural objects are found by the novice 
 to be after all no better than loose approximations 
 to the mathematical ideal. How much more then 
 fact must play havoc with the vaguer formulae 
 of economic science, will be readily understood. Here 
 there will be obstructions, hindrances, impediments 
 of every sort and kind. The. vagaries of human | 
 intellects and human passions will, as we have seen, 
 defy our most careful calculations. Political forces 
 too will interfere with even more visible effect. A 
 Government places a tax on foreign imports and the 
 natural currents of supply are interrupted at a blow ; 
 artificial limitations are imposed upon the price of 
 jam or sugar ; and the whole basis of evaluation will 
 be completely undermined. In short, if we would hope , 
 to see our economic laws hold valid, and the rise and i 
 fall of prices correspond at all nearly to the ideal 
 principles of supply and demand, then we must do, ■ 
 as the mathematicans do, and banish friction, or at ; 
 least, so far as we may, reduce it to a minimum. ■ 
 
 90 I 
 
MONOPOLY 91 
 
 External and obstructive influences must be elimina- 
 ted, if the economic machine is to have free play 
 and its wheels run smoothly. Now the solvent that 
 can best ease them in their working, is liberty of 
 competition ; and the obstacle which clogs them most, 
 is its reverse and opposite, monopoly. 
 IpThe monopolist is the autocrat of the market place ; 
 whether the use he makes of his power be wise 
 or unwise depends on circumstances ; but in any case, 
 like his political counterpart, he is seldom trusted. 
 For his power is a kind of blank cheque on human 
 patience ; and mankind is not unnaturally suspicious 
 of an overdraft. We may suspect that the first man 
 who attempted a " corner'' in food, was lynched by 
 his neighbours without shrift or ceremony ; and, 
 though he himself may have had no intention of 
 starving them at all, they were at any rate acting on 
 the safe side if they did not wait to see. Indeed there is 
 something unnatural in this attempt to cut the channels 
 of supply and hold the world to ransom. So, v^henever 
 men have been politically free, they have suppressed 
 monopolies severely. It is only when the authority 
 of law has been perverted from its proper uses, that 
 this dangerous power has been allowed to pass into 
 the hands of individuals. In Stuart and Tudor times, 
 for instance, the Crown dispensed monopoHes in soap, 
 or linen or tobacco, as a mark of royal favour or for 
 the filling of the royal purse ; but with the growth of 
 democratic institutions, the practice was disallowed, 
 and now, while Government may itself assume 
 unique control of such pubUc services as the telegraph 
 or the . post, or grant a privileged position to private 
 companies (such as those which own the gas-works 
 or the railways) under very definite restrictions, yet in 
 other spheres its authority is no longer exercised m 
 favour of private monopolies, but in the interests of 
 free competition. 
 
92 NEW FALLACIES OF MIDAS 
 
 But, though monopoly, in the more strict and 
 literal sense of the word, has seldom been long tolerated 
 in free countries, it has often existed in disguised or 
 partial forms. Two types are chiefly to be noted ; 
 and of these the first is one which we may call the 
 monopoly of collusion. Now, whatever else com- 
 petition may imply, it certainly implies that each 
 competitor should do his best to outstrip rivals. 
 The race in which the favourite agrees with his adver- 
 sary to run a dead heat, is no race at all ; and similarly 
 it is required of competitors that at least they should 
 compete. If all the producers of some article which 
 is necessary to the consumer agree to make common 
 cause they have the consumer completely at their 
 mercy ; for the monopoly of twenty or two hundred 
 resolute men is no weaker than the monopoly of one. 
 Such unions, appearing recently under the name of 
 Trusts, , Combines or Trade Rings, have usually been 
 defeated or at least restricted in their operation. 
 But, though open attempts at combination have in 
 general been discountenanced by law, there is nothing 
 to prevent manufacturers or merchants from forming 
 some mutual understanding on the sly. Indeed, 
 without the least intent to act unjustly towards the 
 public, it is not unnatural if realising the community 
 of their interests they should come to feel a certain 
 instinct of loyalty towards one another. But whatever 
 the motive of their co-operation, there can be little 
 doubt that it may gravely prejudice the free play of 
 the competitive market, and that the level of prices 
 may be artificially sustained at the consumer's expense. 
 The liberty to unite, like all other liberties, is only 
 legitimate so long as it is not used to the public detri- 
 ment ; and it is sometimes forgotten, even by the 
 most ardent champions of liberty, that a group ma]/ 
 misuse a monopoly as well as a person ; a hundred 
 thousand pitmen who agree to go on strike may be 
 
MONOPOLY 93 
 
 exercising a power no less tyrannical than the millionaire 
 mine-owner who makes a corner in coal* 
 
 There is a second form of virtual or disguised mon- 
 opoly which we may call the monopoly of isolation ; 
 and here at any rate it is nature and not man that 
 is to blame. The world has not been so arranged as 
 to make competition easy ; and the artificial restraints 
 to which we have just alluded, are slight as compared 
 with the physical and geographical impediments. 
 Now-a-days, oceans, lakes and rivers are considered an 
 aid to commerce ; but they have often been equally 
 a hindrance. Islanders have had to suffer the penalty 
 of their position ; it does not benefit them that timber 
 should be abundant on the mainland if there are no 
 boats large enough or strong enough to bring it over. 
 So the man who owns the one plantation in the 
 island, will be a monopolist as much as if it were the 
 one plantation in the world. That is an extreme 
 instance ; and local monopolies of so complete a 
 character are rare ; but so long as space exists and the 
 difficulties of transportation are incompletely met by 
 man's contrivances, competition cannot become 
 entirely free. Even, as things stand to-day, agricul- 
 turalists are generally dependent upon a single railway 
 for the conveyance of their produce, and were it not 
 for the protection of State interference, they would be 
 at the mercy of a monopolist company which could 
 raise freight-dues at its pleasure. Much more were 
 men liable to exploitation in the days before steam and 
 motor transit was invented. Then, competition was 
 limited to narrow areas ; and where states and cities and 
 even villages lived in economic isolation, and were for 
 
 * It is obvious that " co-operation " of this sort, used for the benefit 
 of the few and to the detriment of the many, has nothing in common 
 with the co-operation of the beneficent sort, which is used for the good of 
 all. Furthermore, just as free competition is preferable to monopoly 
 which is misused, so true co-operation may be better than competition 
 that is carried to excess. 
 
94 NEW FALLACIES OF MIDAS 
 
 the most part dependent on their own resources, the 
 opportunities of local monopoly were far greater than 
 in these days of world-wide commerce and cosmo- 
 politan finance. The miller who had sole possession of 
 the local stream could afford to snap his fingers 
 at competitors in the next valley, if a range of steep 
 mountains lay between them ; even a doctor need 
 have little fear of rivals, the nearest of whom lived 
 fifty miles away. And if in the Middle Ages the power 
 of monopoly was used with moderation, whether by 
 individuals or by the Guilds-men groups, this was 
 chiefly due to a sense of neighbourliness and civic 
 loyalty, partly perhaps to a dread of public censure. 
 For under the conditions of those days, the results 
 of misused monopoly were far more obvious and glaring 
 and the popular reaction against it far more swift. 
 
 Competition then, whether in past or present, 
 has never been entirely free from the two-fold inter- 
 ference of isolation and collusion. Monopoly, under 
 one disguise or another, is perpetually creeping in ; 
 endured may be for a while, but in the end almost 
 certainly defeated. Yet monopoly, even while it 
 lasts, is not of necessity the dangerous power it 
 would appear. Not every monopolist can press his 
 advantage to the full ; nor would such a course be 
 to his interest. It does not pay to put up the price 
 of goods, if the consumer is thereby deterred from 
 buying them. Few people, for instance, would care 
 to pay a pound apiece for pineapples ; and if a man 
 who had cornered tropical supplies, attempted to 
 extract that price, the demand would automatically 
 cease ; the monopolist would find no market for his 
 fruit. It is only when a monopoly is held over the 
 more immediate necessities of civilised existence, 
 that the power is likely to be seriously abused. A 
 monopolist, let us say, in corn, or meat or cotton 
 might prove an intolerable despot ; the case of iron 
 
MONOPOLY 95 
 
 or coal would be as bad ; but without doubt the most 
 formidable of all is the monopolist of land. Land is, 
 as we know, the source of all production ; the owner 
 of it controls not the supply of food and clothing 
 only, but of minerals as well. He can do more than 
 interrupt the normal flow of markets ; he can, if he 
 chooses, empty them altogether. And, if his monopoly 
 is complete and exclusive, he is in truth a very 
 dangerous person. 
 
 Now, although the social and economic changes of 
 the last few hundred years have made such monopolies 
 in land well nigh impossible to-day, there have been 
 times when they existed, and when their influence 
 upon society was incalculably great. The isolation 
 of mediaeval communities, to which we referred above, 
 put into the hands of the large land owners a power 
 which was almost unlimited. By means of it, the 
 feudal baron was able to reduce his neighbours to the 
 condition of helpless serfs. He controlled the sources 
 of all livelihood, he could ask what terms he pleased 
 for the right of access to them ; in fact, he held a 
 monopoly of the strictest sort and did not scruple to 
 use it. The social and political privileges which he 
 enjoyed, were built in part upon the basis of this 
 economic supremacy, and these were in their turn 
 employed to reinforce it. For not content with the 
 advantages of natural isolation, he endeavoured to 
 increase his hold over the servile classes by open collu- 
 sion with his brother barons who were also his possible 
 competitors. Laws and customs were evolved by 
 which a peasant was denied the right of quitting the 
 estate on which he lived ; and, thus tethered to the 
 soil, the wretched man had but two alternatives before 
 him — to accept whatever terms his lord might offer 
 or to starve. The triumph of monopoly was complete, 
 for under FeudaHsm, the peasant's economic liberty, 
 like his political liberty, was dead. 
 
96 NEW FALLACIES OF MIDAS 
 
 Times have changed; Httle by little the artificial 
 barriers of feudal tenure have been done away ; 
 estates have been broken up and land is now more 
 widely and evenly aistributed,* more important still, 
 new continents have entered into rivalry with the old ; 
 new methods of transport have quickened competition 
 all the world over ; and the English landowner must 
 now acknowledge his defeat by colonists across the 
 seas. Monopoly in the old sense is no longer possible ; 
 but though the worst menace of landownership is 
 gone, its power has been revived in a different fashion. 
 The old monopolist became a tyrant, because industrial 
 progress was slow ; but the modern monopolist 
 becomes a plutocrat because industrial progress 
 has been swift. For the sudden development of 
 industry which took place during the last hundred 
 years, has given to land a new and, as it were, a con- 
 centrated value. For it drove two-thirds of the working 
 population out of the country into the towns. Now 
 manufacture must naturally centre round the sites 
 where clay or metal are to be found or where raw 
 material can be easily imported ; merchants and 
 transport workers must naturally congregate where 
 harbours or rivers offer convenient anchorage 
 for ships. And, as commerce and manufacture in- 
 creased with unprecedented strides, the old towns 
 extended their boundaries, new towns sprang up. 
 Factories, warehouses, smelting- works, rich men's 
 mansions, and poor men's tenements had to be 
 built and they must be built on somebody's land. Space 
 is needed at whatever cost ; and it must be space here 
 upon the spot and not at two miles distance. So the 
 man who bought a hundred acres years ago as grazing 
 
 * The beginning of the nineteenth century, however, witnessed a 
 new and deplorable tendency towards the formation of large estates : 
 the yeoman-farmer was largely dispossessed in favour of the land -lord, 
 and it is only lately that the tide has set in the opposite direction, and 
 small holdings have begun to be common. 
 
MONOPOLY 97 
 
 ground for cattle, now finds himself in the favoured 
 position of a monopolist. He has no competitors, 
 for he can supply what is urgently needed, and nobody 
 else can ; and if he makes the most of his chances, he 
 may reap an immense and even a fabulous return by the 
 exaction of ground rentals ; or (if minerals are found 
 upon his land) of royalties. Riches flow in upon him 
 through no trouble or virtue of his own (unless it were 
 the gift of prophecy). Without himself lifting a finger 
 or doing a stroke of honest work, he finds his income 
 multiplied a hundred or a thousand fold. And his 
 case is common enough ; this is no imaginary or 
 exaggerated picture. Many of the wealthiest men in 
 the world to-day owe their huge fortunes to some such 
 lucky accident or gift of brilliant foresight ; and the 
 millions upon millions paid by the tenants and lease- 
 holders of our great towns are the " unearned incre- 
 ment " of these latter day monopolists. 
 
 We will not waste words here over a justification of 
 the Rights of Property. Men have debated long and 
 will probably debate still longer, whether land owner- 
 ship is an inalienable right or an intolerable abuse, an 
 obsolete relic of aristocratic privilege or a natural 
 institution which cannot be violated without grave 
 prejudice to the common weal. In this case of un- 
 earned increment however, we must admit that there 
 is excuse, if anywhere, for interference. Govern- 
 ments which have dealt with monopoly in other forms, 
 may surely deal also with monopoly in land ; it is 
 their right at least, if not their duty ; and the Socialist 
 would maintain that it is both ; he would deny the 
 title of any individual to take so exorbitant a toll of the 
 wealth of the community and yet himself do nothing 
 to deserve it, — nay, he would go further still and 
 condemn all rent as unjustifiable extortion. What 
 right, he will say, has one man to benefit by nature's 
 gifts which he does not use himself, because another 
 
98 NEW FALLACIES OF MIDAS 
 
 wishes to use them — to share the profit but not to 
 share the toil ? It is as though the village water-man 
 were to take possession of the spring, and henceforth 
 instead of asking payment for water delivered at our 
 doors, were to sit idle by the well mouth and exact a 
 fee for every bucket drawn. Value, as we have 
 agreed, is proportionate to the difficulty of supply. 
 The depth of the well, the weight of the bucket, the 
 length of the road, these are natural obstacles which 
 can only be overcome by human labour, and which 
 therefore may very properly regulate the water's 
 price. But to add this further obstacle of the owner's 
 tax is both unnatural and unnecessary. In short, 
 says the Socialist, abolish rent, take land from private 
 persons, hand it over to the State, and then at last will 
 value be regulated no longer by the land-owners' 
 rapacity, but solely by the services rendered by the 
 labour or the skill of men. Unearned incomes would 
 disappear ; only the earned remain, and we shall be 
 troubled by monopolists no more. Our Socialist's 
 reform is sweeping ; he has spread his net cunningly 
 and he has drawn it wide ; but if he thinks thereby to 
 catch all the big tyrant fishes of the sea, he is certainly 
 mistaken for, as shall be seen, he has not drawn it 
 nearly wide enough for that. 
 
 Note on Ricardo's Theory of Rent. 
 
 If, upon the Socialist plan, the State were to take 
 control of the land and to let it out to tenants at a 
 reduced rent or even at no rent at all, it is a natural pre- 
 sumption that the prices of produce would be lowered, 
 and the consumer would score. But the matter is not 
 so simple as that, and if the theory put forward by 
 Ricardo is correct, such an idea is pure delusion. Accord- 
 ing to his view, the price of corn is determined solely 
 by the initial cost of producing it, that is, by the cost 
 of seed, implements, manure and, above all, by the 
 
MONOPOLY 99 
 
 labour of man and beast, but 7iot by rent. It follows, 
 therefore, that however much rents may be raised or 
 lowered, the price of corn will still remain the same. 
 
 Now, in order to grasp Ricardo's theory, let us first 
 observe that lands differ in fertility ; some produce 
 corn more freely than others, and on these the cost of 
 growing a bushel of corn will be proportionately less. 
 Is the price of corn then fixed by the cost of growing it 
 on the richest land or on the poorest ? Is it Sir Midas 
 Mucklethwaite, owner of the most fertile farm in 
 England, who sets the standard of the market ? Oddly 
 enough, no ; it is an obscure Irishman who has recently 
 broken up a few acres of common land in County Cork 
 and farms them rent free at a trifling profit. And the 
 reason of this paradox is as follows : that since the 
 land is poor, Patrick's corn will cost more to grow, 
 and, unless (which in a poor man in unlikely) he is 
 prepared to grow it at a loss, his selling price must be 
 necessarily high. This is unpleasant for the con- 
 sumer, and yet he must pay it, and for a very good 
 reason. For with our growing population there is an 
 increased demand for corn ; and since somebody needs 
 Patrick's corn to satisfy his hunger, somebody must of 
 necessity pay the price that Patrick asks. Meanwhile, 
 Sir Midas, though he could well afford to sell his own 
 corn cheaper, cannot bear to be out-done by Patrick 
 (and indeed why should he ?) so he raises his price 
 also up to Patrick's level. Thus, the standard of the 
 market is not set by him at all, but by his poorest rival. 
 The surplus profit which Sir Midas obtains, is the 
 reward of owning his more fertile land. 
 
 If we agree with Ricardo so far, let us now enquire 
 what is the value of Sir Midas' land ; what is its 
 superior quality worth as compared with land like 
 Patrick's which can be had for nothing ? or, in plain 
 language, what is the rent which Patrick (or for that 
 matter anyone else) would have to pay for the use of 
 
100 NEW FALLACIES OF MIDAS 
 
 it ? Clearly the rent will be the exact equivalent of 
 the surplus profit above mentioned — the difference, 
 that is, between the production cost of Sir Midas' 
 corn on the one hand, and the selling price of Patrick's 
 corn on the other. More Sir Midas cannot ask, for 
 that would be to reduce the tenant's profit below what 
 the tenant could make by farming common land in 
 County Cork, and this, as we have seen, would mean 
 sheer loss to the tenant. Less Sir Midas can of course 
 ask if he chooses ; but that would be to raise the 
 tenant's profit above what he could make by farming 
 common land in County Cork ; a gratuitous benevo- 
 lence on Sir Midas' part, since Patrick, if he got the 
 chance, would certainly be ready to make a higher 
 bid. Nor would Sir Midas' benevolence affect the price 
 which the consumer pays for corn — it would merely 
 put a portion of the surplus profit into the tenant's 
 pocket from his own, 
 
 Nor will it be otherwise, if the State were to become 
 landowner in Sir Midas' place ; it would be powerless 
 to reduce the selling price of produce from the land. 
 Hence it comes that Henry George, the American, was 
 opposed to the Socialist scheme of nationalising the 
 land ; and proposed an alternative which many 
 thinkers have adopted. Their idea is to tax all land 
 upon its rent-value, taking all or most of what the 
 landowner receives. If this were done, there would be 
 no special advantage in owning rich land, no special 
 handicap in owning poor land ; all owners alike would 
 start, as it were, at scratch ; their profits would depend 
 solely upon their own exertions (as was the case with 
 Patrick's farm) and finally the surplus value of all 
 lands richer than the meanest common land, would 
 pass into the public purse for the benefit of the 
 community at large. 
 
 At first sight Ricardo's theory is extraordinarily 
 convincing ; and George's is a natural corollary of its 
 
MONOPOLY loi 
 
 acceptance. Nevertheless most people are unconvinced 
 or at any rate unconverted. The Land Tax method 
 would probably break down for a reason which we shall 
 examine presently. This is the difficulty which would 
 inevitably arise in discriminating between the value of 
 land pure and simple, and the accessory value, which 
 is due to man's exertions. After all, Sir Midas has not 
 been idle during all his years of ownership, he has at 
 least done something for the soil ; tilled it, manured it, 
 hedged it in and planted it with timber. Besides this 
 he has built barns and yards and cottages on the estate ; 
 developed roads and fitted them with gates. A thriv- 
 ing farm possesses much beyond the natural fertility 
 of its soil ; and to estimate what proportion of its 
 value is due to nature, what to the work of man, 
 would be a task which not even the most scrupulous 
 assessor could perform with perfect justice. 
 
 But there is a still more vital objection to Ricar do's 
 theory, namely, that it does not fit with the facts. He 
 wrote, it is true, when the pressing needs of our growing 
 popuUtion was forcing men to cultivate poor Irish 
 soil : and, if the possibility of expanding agricultural 
 production had in truth been limited to these islands, 
 no doubt rents would have risen according to Ricar do's 
 thesis, and risen to an intolerable extent : but, as 
 things turned out, the cultivation of richer lands (rent 
 free or almost rent free) in America and elsewhere has 
 had the precisely opposite effect. The competition 
 of corn imported from abroad has not advanced rents 
 in England, but kept them down. It has scarcely paid 
 to grow corn in many counties where formerly it was 
 a profitable business. In other words, Ricardo' s theory 
 is about as applicable to present-day conditions as the 
 Law of Moses would be applicable to the city of New 
 York. The reforms, therefore, which rest upon Ricardo' s 
 hypothesis, are purely chimerical. They simply would 
 not help us in the least to solve the problems of to-day. 
 
Chapter X. 
 THE POWER OF CAPITAL. 
 
 (i.) i 
 
 It once befel that in a certain village (not far remote, 
 perhaps, from the neighbourhood of Nowhere) there 
 arose the very trouble which our Socialist imagined. 
 A rapacious fellow — no matter by what means — had 
 come into possession of the village spring, and lived 
 by levying an extortionate tax upon the water supply 
 of the inhabitants. At length the Parish Council 
 determined that this tyranny should be endured no 
 longer, and agreed amongst themselves to make a 
 practical experiment in Socialistic legislation. A 
 resolution was unanimously passed, annulling all 
 private claims over the natural sources of the supply of 
 water ; and thereby the well — for there was but one — 
 became Parish property for ever. By a stroke of the | 
 pen every parishioner was made free in future to get his 
 drink for nothing. Amid general congratulations the 
 chairman rose to suggest that a draught of water 
 should then and there be fetched and drunk by all 
 present in token of their new-won liberties. The 
 proposal was enthusiastically received, but scarcely had 
 the village beadle been despatched to the well, Vv^hen a 
 fresh predicament was disclosed. The well was deep — 
 without the use of the rope and windlass which the 
 ex-proprietor had installed with his own hands, the 
 bucket could not be lowered, much less raised, and the 
 sly scoundrel lost no time in informing them that the 
 use of these properties was only to be had upon the 
 same conditions as before. Now the terms of the 
 
THE POWER OF CAPITAL 103 
 
 resolution made reference only to the natural sources 
 of supply, but did not cover the removal of any man's 
 property against his will, nor the confiscation of what 
 his personal labour had produced. Argue as they 
 might— and argue they did in long and numerous 
 debates — no agreement could be reached upon the 
 propriety of such a course. In the meantime the owner 
 remained m.aster of the situation ; the villagers could 
 not live without their water, nor draw their water 
 without the windlass and the rope ; there was there- 
 fore no alternative but to pay the tax ; and the 
 owner's monopoly has continued unimpaired until 
 this day. Now the moral of the tale is this ; that the 
 means of production and the sources of production 
 are often so mutually dependent that a monopoly in 
 one may often be as powerful an instrument of extortion 
 as a monopoly in the other. The Socialist may confiscate 
 the land or deprive the landowner of his rents, but such 
 half measures will never bring him to his goal. The 
 Capitalist, a yet more formidable adversary, still 
 stands astride the path. 
 
 It has never been easy to estimate in their true 
 relative proportions what part is played by nature 
 and what by man in the process of production, to 
 distinguish between the value of the well-head and the 
 value of the well, or between the machinery at the pit- 
 mouth and the mineral deposits in the soil. Even 
 in cases where the means and the sources of production 
 are less closely interlinked, no very clear distinction 
 can be drawn. But this much at least may be said, 
 that, as industry has developed, the importance of the 
 means has steadily increased, until in our own day 
 Capital has assumed a predominant position in the 
 partnership. In olden times, before machinery had 
 been invented, the implements of agriculture and 
 manufacture were relatively of less importance. Next 
 to the material sources of supply it was then man's 
 
104 NEW FALLACIES OF MIDAS 
 
 labour and man's skill that counted most. Given a 
 field ; any smith could make and any labourer drive 
 the plough that should till it; given a forest, any 
 woodsman could fell the trees, and any joiner turn them 
 into houses, furniture or carts ; so the two most power- 
 ful elements in mediaeval society were the landowner 
 and the Craftsman's Guild. To-day, however, it is 
 different ; modern production depends upon an 
 elaborate paraphernalia of powerful engines and delicate 
 machinery. Without these, not only would most of 
 our production be impossible, but the raw material 
 would often be nothing better than worthless refuse. 
 Were it not for the intricate processes by which valuable 
 by-products are extracted from a slag-heap, it would 
 simply cumber the ground. Modern science has even 
 turned the atmosphere to serviceable uses ; and by a 
 recent German invention nitrates are evolved out of the 
 empty air. In this case, as in many other instances, 
 the whole value seems to centre upon the mechanism 
 or production ; and even of industry in general the 
 same principle holds true in a greater or less degree. 
 The man at the Lancashire power loom is more im- 
 portant than the nigger with a hoe ; and the profit 
 to be made in turning out the finished article is out 
 of all proportion superior to the profit of raising the 
 raw material. A very little knowledge of the world 
 will show that it pays better to be a manufacturer 
 than a farmer. 
 
 In short, the supremacy of the Capitalist in the 
 modern world is not to be disputed. His povv^er is 
 probably far greater than was ever the power of feudal 
 landowners ; his influence extends more widely, 
 employing the labour and controlling the destiny of 
 multitudes ; his authority strikes no less deep into 
 the social and political life of countries, bending even 
 emperors or governments to his will. Yet, for all 
 this, it can hardly be asserted that his power is based 
 
THE POWER OF CAPITAL 105 
 
 upon monopoly. Capital is not of its own nature an 
 obstacle to competition. For, in the first place, it is 
 not like land limited in dimension. No amount of 
 thought or trouble can add new acres to the earth's 
 natural surface ; but you may build factories, and 
 laboratories, railroads or smelting works, so long as 
 there is room to build or a need to satisfy. Any man 
 who has saved himself or can borrow other's savings, 
 can make a fresh addition to the world's capital ; and 
 though here and there some novel invention or other 
 unique advantage may put a temporary monopoly 
 in the hands of some fortunate capitalist, yet where 
 he can lead, somebody else can follow ; the rights of 
 patents are not so rigid or exclusive but that others 
 can profit by a new idea, and in the long run com- 
 petitors will not be wanting. In the second place, 
 capital is far more widely distributed than land. Any 
 man who has saved even a few pounds to invest in 
 railways, oilwells, motor works or what not, can have 
 his share in capital. In virtue of that share he can 
 claim that somewhere there exists a yard of railway 
 track which belongs to him ; or an engine crank that 
 his savings have helped to create ; and there would be a 
 sort of truth in his jesting boast. To the length of his 
 few pounds he, too, is a capitalist. But, although 
 capital is more easily acquired and possesses greater 
 elasticity than land, it is in these very qualities that 
 lies the secret of its peculiar power. Capital may be 
 not productive merely ; but self-productive. It 
 resembles that tropical tree whose roots send forth fresh 
 suckers from which new trees spring up. In like 
 manner the capitalist can utilise his profits for the 
 erection of new factories, the employment of more 
 hands, or the improvement of his plant ; and thus 
 in a hundred ways secure fresh capital and fresh 
 profits— to be used in turn for the same purpose as 
 before. In this fashion, large businesses have sprung 
 
io6 NEW FALLACIES OF MIDAS 
 
 from small beginnings, and men who have started life 
 with the proverbial sixpence in their pockets, have 
 become the kings of industry and commerce. 
 Millionaires and even multi-millionaires are now 
 no rare phenomenon, and wealth accumulates and 
 grows in the hands of such individuals until imagin- 
 ation can no longer grasp the magnitude of their 
 resources ; and all the while fresh profits are rolling 
 in upon them (far more than any man could spend 
 upon himself) and are in their turn sent back to swell 
 the central stream. Unto him that hath shall be 
 given, is the inevitable law of high finance. 
 
 But the Bible text does not end there ; and un- 
 happily its conclusion has also its economic counterpart. 
 The great industrial change which brought so rich 
 an opportunity of profit for those who possessed a 
 share in capital, was the beginning of a very disastrous 
 era for those who possessed none. It was after all an 
 insignificant fraction of the whole people that shared 
 those opportunities. The millions of workers whose 
 wages were seldom sufficient and never more than 
 sufficient to keep them clothed and housed and fed, 
 were not able to save. If from week to week a' few 
 pennies were put by, the hoard was kept against the 
 accidents of sickness or the coming of old age ; they 
 had not the power, or if the power, then not the habit 
 to invest. Beyond a few sticks of furniture, a little 
 crockery, perhaps a tool or two, the poor possessed no 
 property of their own ; and in the vast apparatus of 
 mechanical production, the powerful instrument of 
 loom and forge, printing press and lathe, they had no 
 share at all. Their only capital (if we may call it so) 
 was strength of muscle and skill of hand ; and with 
 these feeble resources they were compelled to pit 
 themselves in an unequal conflict against the Capitalist 
 Colossus. For conflict it certainly was ; and unequal 
 (under such conditions) it must be, as surely as the 
 
THE POWER OF CAPITAL 107 
 
 bargain between a man with a loaf and a starving 
 beggar must be unequal. For, though a bargain is a 
 voluntary exchange between two parties, it does not 
 necessarily follow, that the bargain will be fair or that 
 the two parties will compete upon an equal footing. 
 It may well be that one will hold the other at a dis- 
 advantage ; his bargaining power, as we say, will be 
 the stronger of the two, and, like the commander of the 
 victorious army, he can dictate the terms. Yet, to say 
 this is nothing more than to restate in different words 
 the old formula of supply and demand ; and it is by 
 the light of that formula perhaps that we can best 
 understand the relations of capital and labour and 
 estimate the bargaining power of each. 
 
 First then as concerns demand. It is clear that 
 each wants what the other has to give ; Capital wants 
 work, and Labour wages; but their wants, though 
 mutual, are very different in degree. The employer, 
 it is true, depends for his success upon the services of 
 labour ; he may be ruined in his business, if labour 
 fails him ; but, even in that case, all his eggs are 
 seldom in one basket ; he will have some reserve of 
 funds ; most certainly he need not starve, perhaps 
 not even put down his horses or dismiss his butler. 
 For the worker it is far otherwise. His weekly earnings 
 are sufficient only for the week ; he has no reserve or 
 next to none ; and if a few shillings lie between him 
 and starvation, that is all. For him., Hving thus upon 
 the edge of absolute disaster, the first necessity is to 
 find employment. Upon what terms he can hardly 
 stop to ask. If is not for him to haggle ; for upon a 
 trial of strength he must inevitably prove the weaker 
 man ; and before the employer has seriously con- 
 sidered some readjustment of the household, he and his 
 family will have starved. The balance in the bargain 
 is against him. 
 
 Nor, if we turn to the question of supply, is the 
 
io8 NEW FALLACIES OF MIDAS 
 
 worker's case much better. He needs a job ; but that 
 there are seldom jobs for all, requires no proof. Un- 
 employment is only too common and too obvious a 
 circumstance. Trade fluctuates ; a slump follows on 
 a boom and mills and factories are shut down or the 
 number of hands reduced. Many industries offer no 
 more than temporary employment, and in the off 
 seasons many an able-bodied man will be thrown out of 
 work and tramp the streets in search of some casual 
 employment. And the natural corollary of all this it 
 is not difficult to see. The employer for his part finds 
 no difficulty of supply. With this floating reserve of 
 unemployed and casual labourers to draw on he can 
 get all the labour he requires. The more numerous 
 the applicants and the keener the competition for the 
 post, the closer will be the bargain he can drive and the 
 lower the wages he need pay. Only at rare intervals 
 does an actual scarcity of labour turn the balance 
 decisively against him. Such was the scarcity that 
 followed the Black Death, and first broke down the 
 tyranny of feudal customs ; the plague by killing off 
 large numbers of the peasants, enhanced the value of 
 the survivors' labour and gave them the opportunity 
 to turn upon their masters. Such again has been the 
 scarcity which in our own time was caused by drafting 
 of the able-bodied into armies and which raised the 
 scale of wages to an unprecedented level. But these are 
 exceptions to the general rule ; normally the supply of 
 labour is in excess of the employer's demand, and 
 never more so than in the first half of the last century, 
 when the impetus of the Industrial Revolution was first 
 gathering strength, and when the relations of capital 
 and labour, as we know them, first took shape. 
 
 (II.) 
 
 Since the early days of capitalist supremacy much 
 has happened to alter the course of the ecorlomic 
 
THE POWER OF CAPITAL 109 
 
 struggle. The social conscience of the nation has 
 awakened ; Labour has begun to organise and Govern- 
 ment to interfere ; and the picture which we have 
 drawn of the capitalist's power and the labourer's 
 necessity, though true of many, is by no means true of 
 all classes of industry to-day. But as a picture of the 
 early stages of the industrial revolution it is certainly 
 not overdrawn. Indeed the shadows are hardly to be 
 painted dark enough ; it is almost impossible to 
 exaggerate the misery and horror of those years. It 
 is one of the most bitter ironies of fate that the very 
 change which by increasing the facilities for plentiful 
 and cheap production ought to have brought an imme- 
 diate improvement in the condition of the poor, had 
 at first an almost directly opposite effect.* For one 
 thing the new mechanical appliances which very soon 
 ousted the old-fashioned methods of hand labour, 
 required fewer men to work them. A reaping machine 
 will take the place of a dozen mowers ; and one or 
 two tenders of a power loom could do the work of 
 perhaps fifty weavers ; thus many handicraftsmen 
 found themselves thrown out of employment ; and we 
 cannot wonder that they bitterly resented the intro- 
 duction of these new machines which robbed them of 
 their livelihood, or that their protests often took the 
 most violent and most lawless form. Then again, it 
 was soon discovered by employers that in the new 
 processes of industry there was ample scope for using 
 female and child labour. Women were set to work in 
 factories by night as well as day ; children, ten, eight 
 and six years old, were employed in coal mines dragging 
 preposterous weights through the damp, unwhole- 
 some galleries. Manufacturers even procured girls 
 
 * It must not be assumed, however, as it too often is, that the lot 
 of the labourer before the Industrial Revolution was a bed of roses. 
 Poverty and distress were perhaps just as common, but the conditions 
 of the towns seems to accentuate the hardships of the poor — partly by 
 contrast with the more obvious luxury of the rich. 
 
no NEW FALLACIES OF MIDAS 
 
 and boys from workhouses and foundling hospitals ; 
 and subjected them to a lifelong drudgery little better 
 than the bondage of a slave. Meanwhile thousands had 
 left their country homes and migrated to the new 
 •industrial centres, urged thither by the loss of their old 
 livelihood or enticed by the hope of a better. So the 
 population of the towns steadily increased ; and the 
 families, herded together in conditions of appalling 
 squalor, grew and multiplied prodigiously ; for the 
 poorest and most miserable classes, among whom 
 parents are over-eager to reap the advantage of their 
 children's labour, are naturally the most prolific. 
 With food at high and (until the repeal of the Corn 
 Law) at intolerable price, wages were quite inadequate 
 for decent comfort or nutrition. For the weaker and 
 less skilful life became a veritable struggle to survive. 
 From all the various causes which we have just 
 described, the supply of labour now far exceeded the 
 natural demand, and the result was the most bitter 
 competition for employment. Moreover, the oppor- 
 tunities of finding it were strictly limited. If it was 
 not to be found upon the spot, there was little chance 
 of gaining information about other towns, and, if 
 information were forthcoming there were few facilities 
 for travelling thither. Railways were neither cheap 
 nor numerous ; and labour bureaux were not invented. 
 So in the matter of labour employers had no special 
 fear of distant rivals ; they exercised a local monopoly, 
 and provided that the wage they offered was enough for 
 bare subsistence, they were sure to find applicants in 
 plenty. Nor did they scruple to take advantage of 
 their power ; and as their wealth multiplied, their 
 position became more and more secure. They could 
 face the feeble opposition of the masses — Chartists 
 strikers and even rioters — with the confident assurance 
 of the stronger party. To the ominous signs of a still 
 deeper and more lasting discontent they hardly gave 
 
THE POWER OF CAPITAL iii 
 
 a thought — until little by little there came over England 
 that fatal cleavage of the classes which was the begin- 
 ning of industrial war. 
 
 This absence of sympathy between Capital and 
 Labour was in part at least the inevitable consequence 
 of the industrial innovations. In the old-fashioned 
 craft workshop master and apprentices, employer and 
 employed, had lived and worked together side by side ; 
 and such daily intercourse had bred between them a 
 mutual loyalty and goodwill. But the head of a 
 factory employing perhaps a thousand hands could 
 hardly keep in touch with individuals. The bond of 
 sympathy was broken ; and, just when it was most 
 needed, the employer ceased to feel a sense of personal 
 responsibility towards the men and women he employed. 
 As was natural, the softer feelings of generosity and 
 pity were slowly blunted, and even the most respectable 
 and virtuous employers were indifferent to the sufferings 
 which often unwittingly they were inflicting on their 
 fellow-beings. But as though half conscious that some 
 justification was required for such rigorous and even 
 inhumane conduct of their business, they sought to 
 reinforce their shaken assurance of moral rectitude by 
 an appeal to economic wisdom. They were them- 
 selves the disciples and in some sense the product of 
 that school of thought which began with Adam Smith 
 and was carried on by John Stuart Mill. From these 
 teachers they had imbibed the doctrine which was the 
 basis of their business creed, that it was the economic 
 duty of every individual to put his own interest first and 
 others' interests nowhere, driving the closest bargain 
 possible, buying in the cheapest market, selling in the 
 dearest, and applying the principles of supply and 
 demand without scruple or restraint. Unfettered 
 and even ruthless competition was to them the very 
 soul of commerce, and to do them justice they were 
 sufficiently consistent to maintain their creed even 
 
112 NEW FALLACIES OF MIDAS 
 
 when it might tell against them. They would uphold 
 the principle of Free Trade and the Open Door, 
 although the importation of cheap foreign goods might 
 prejudice their own sales in English markets ; and they 
 met competitors at home with the same bold spirit of 
 defiance. They asked no quarter and gave none ; 
 so it seemed only fair and natural that in their attitude 
 towards labour they should pursue their settled 
 policy. Between labourer and capitalist, it was each 
 for himself, a fight to the finish in a fair field and no 
 favour ; and if the labourer should make but a poor 
 fight of it, so much the worse for him. And, when 
 doubts arose, as they were bound to do, concerning 
 the justice and morality of such a course, the sponsors 
 of this gospel of selfish individualism were prepared 
 with their defence. The defence which they advanced 
 was as paradoxical as it was ingenious ; for it claimed 
 that the very keenness of the struggle was in reality 
 for the worker's own advantage. The interest of the 
 whole community, it was said, would best be served 
 when every individual pursued his own interest to the 
 uttermost of his power. The prosperity of all could 
 only proceed from the prosperity of each ; let each 
 therefore strive to develop as best he could the means 
 and resources which lay at his disposal, and it would 
 inevitably follow that production would be multiplied, 
 the volume of trade increase, and the richest possible 
 harvest would eventually be reaped by the community 
 at large. In such a consummation even the poorest 
 workman would have an ample share ; everything 
 would be plentiful, every price cheap and everybody 
 prosperous. 
 
 To this philosophy no reasoned opposition was 
 offered and hardly a voice (for a while at least) was 
 raised against it. Its supporters, who, because they 
 were chiefly to be found in the big industrial and 
 commercial centres of the north, came to be known as 
 
THE POWER OF CAPITAL 113 
 
 the Manchester School, saw no reason to go back upon 
 their logic. Wrapt in the security of their comfortable 
 creed, they continued to pile fortune upon fortune ; 
 for the miserable condition of the masses upon whose 
 labour and poverty these fortunes were in a large 
 measure built, they felt no doubt an honest regret and 
 pity. In private perhaps they would indulge this 
 secret weakness, doing a kind turn to an employee 
 in distress and permitting their wives to make charit- 
 able doles of soup or blankets. But in the counting- 
 house or at the works they suppressed these softer 
 feelings, conscientiously tenacious of their creed. 
 And if its present application bore hardly upon others, 
 what could they do but shrug their shoulders and 
 pursue their course to its appointed end ? Let their 
 philosophy but be given a fair trial, and all would 
 yet work out for the best. 
 
 When the fathers have eaten sour grapes the 
 children's teeth are set on edge, and there is much for 
 which the Victorians must be answerable in the in- 
 dustrial troubles of to-day. Yet easy and natural as 
 it is for us to condemn the sins for which we suffer, we 
 should be doing less than justice to the Victorians if we 
 did not acknowledge the one great debt we owe them. 
 Coming at a time when the paramount necessity was 
 to increase production, it is undeniable that they 
 performed their task. They built up the capital 
 resources of which we are reaping the benefit to-day, 
 and their only crime was that they so exaggerated 
 the importance of this economic function as to be 
 blind to other issues which were important too. In 
 short, as is the common failing with authors of great 
 changes, the leaders of the Industrial Revolution 
 overdid their part. The idea which underlay their 
 policy was sound enough, but like most ideas, it 
 became intolerable when pressed to its logical con- 
 clusion. As a reaction from the hampering restrictions 
 
114 NEW FALLACIES OF MIDAS 
 
 of the previous economic era, their programme of 
 Free Trade and Open Competition was an undeniable 
 advance; and it is to their lasting credit that they 
 founded a school of thought which was then, as it is 
 now, the mainspring of progressive Liberalism. In so 
 far as their policy inflicted grievous harm on others, 
 they were perhaps as much the victims of circumstance 
 as the conscious or willing authors of distress. The 
 individual, let us remember, is nearly always the 
 creature of his environment ; he cannot easily resist 
 the overwhelming pressure of events, or rebel against 
 the standard of the society in which he lives. So, 
 before we pass judgment upon the Victorian manu- 
 facturer, we should in very justice take account of 
 the difliculties in which he stood. He was himself 
 faced with the keenest competition of energetic rivals ; 
 and if the wages that he paid were low (though in 
 point of fact they were not so low as the wage of the 
 agricultural labourer) it was the market and not he 
 that fixed the standard. The very urgency of men's 
 needs was with him an argument for offering a low 
 wage ; for it seemed inevitable, and in a certain sense it 
 was inevitable, that the most urgent need should be 
 satisfied before the need which was less urgent ; and 
 the only way to discover where the pinch was most 
 severely felt, was to ofier employment to the lowest 
 bidder. Such reasoning did not appear to the Vic- 
 torians as contrary to justice or humanity ; and even 
 if it had appeared so, they could hardly have helped 
 themselves. For us, looking back from a more secure 
 and prosperous era upon the bitter struggle of those 
 times, it is easy to correct the fallacies into which they 
 fell. For now the pendulum has swung once more ; a 
 new reaction has set in ; and where they rightly saw 
 the necessity for individual freedom, we now see the 
 danger of too much freedom and the necessity of 
 curtailing it. And so for us unlimited competition is 
 
THE POWER OF CAPITAL 115 
 
 suspect. Individualism stands at a discount, and 
 Socialism and Co-operation are the favourite catch- 
 words of the day. Each generation is to be judged 
 according to its lights ; and if the worst fault of the 
 Victorians was that they carried their principles too 
 far, it is for us to profit by their example ; and while 
 we endeavour to correct the results of their exaggerated 
 creed, let us beware lest we fall under the same con- 
 demnation and mar even beneficent reforms by a lack 
 of patience or an excess of zeal. 
 
Chapter XI. 
 THE PROTEST OF RUSKIN. 
 
 (i.) 
 In the ferment of revolutions (whether of trade or of 
 politics) half a truth is a better guide than no truth at 
 all ; and the Manchester doctrine, crude and per- 
 verted as it was in some directions, contained enough 
 economic wisdom to produce good results as well as 
 evil. The crowning triumph of its political supporters 
 who succeeded through the repeal of the Corn Law in 
 1846 in wresting an unfair privilege from a landed 
 aristocracy and in opening the door to the free im- 
 portation of cheap grains from foreign countries, did 
 more to alleviate popular distress than any amount of 
 sentiment or charity could have done. The effect of 
 this reform was almost instantaneous ; and during 
 the third quarter of the century there was a steady 
 improvement in the condition of the working classes, 
 who were now able to secure at least the necessities of 
 life at moderate prices. At the same time the benefits 
 of increased production were beginning to make them- 
 selves felt. The enterprise of the capitalists who had 
 succeeded during the forties in laying down railroads 
 over thousands of miles of country and in every part of 
 England, gave a fresh impetus to trade and led to a 
 period of unprecedented prosperity in which every 
 class could claim some share. During these years it is 
 not much to say that a third of the population were 
 raised above the limit of abject poverty. The tide 
 was turning at last; and one index (though an un- 
 
 116 
 
THE PROTEST OF RUSKIN 117 
 
 wholesome index) of the change is to be found in the 
 portentous growth of the national expenditure on 
 drink, a growth which continued unabated until the 
 lean years of trade depression in the seventies. In 
 industry too the worst abuses were gradually suppressed. 
 The philanthropic zeal of Lord Shaftesbury and others 
 set the political wheels in motion, and laws were passed 
 curtailing the use of child and female labour in pits and 
 factories. Yet to whatever causes we may ascribe 
 the betterment of the working man's position, the 
 capitalist himself deserved no special thanks. Though 
 he might fairly interpret the new prosperity as a 
 justification of his own theories, yet there was no 
 recantation of his main hypothesis, and little enough 
 change of heart. The grinding tyranny of merciless 
 competition still held the field unchallenged ; even 
 earnest men like Bright and Cobden who had achieved 
 the deliverance of the country from the killing burden 
 of the Corn Tax, were nevertheless among the most 
 stubborn opponents of Lord Shaftesbury's reforms. 
 In a large number of industries wages were still main- 
 tained at a starvation level. The tale is told how in the 
 streets of Leicester, the Chartist, Thomas Cooper, hearing 
 the stocking-makers busy at their work far into the 
 night, and enquiring of a friend what wage they earned, 
 was told that the wage was about four and sixpence.* 
 '* You mean four and six a day," said Cooper, in all 
 innocence. *' No, four and six a week," was the reply, 
 and this for working sixteen hours out of the twenty- 
 four. Such a state of things was not to be remedied 
 in a day, and meanwhile it was regarded, by theorists 
 and society alike, as the outcome of an economic law 
 which with the best will in the world neither capitalist 
 nor labourer was able to alter or resist. So accepting 
 poverty and distress as the inevitable accompaniment 
 
 * See an essay in Arnold Toynbee's " Industrial Revolution " 
 entitled " Industry and Democracy." 
 
ii8 NEW FALLACIES OF MIDAS 
 
 of industrial progress, Mid- Victorian England refused 
 to vex its soul over such matters ; and relapsed into 
 a self-satisfied complacency which contrasts strangely 
 with the qualms and heart-searchings of our twentieth 
 century days. 
 
 Into this secure world of comfortable platitudes 
 and prosperous energy, there was launched at length a 
 challenge which startled and not a little shocked it. 
 In 1869 John Ruskin, known hitherto as a brilliant 
 but somewhat wayward critic of painting and Italian 
 architecture, wrote for the Cornhill Magazine a series 
 of four essays, which eighteen months later were 
 published in a book entitled, " Unto This Last." In 
 these essays Ruskin denounced in no veiled terms the 
 utter rottenness of the industrial conditions then 
 'prevailing. His was not perhaps the first protest that 
 was made ; Carlyle had inveighed against an avaricious 
 age with all the passion of his racy rhetoric. Dickens 
 in " Hard Times," and other novels, had revealed 
 something of the miseries of the poor. But to challenge 
 the authenticity of the Manchester gospel, to call in 
 question the truth of its fundamental hypothesis, this 
 had hardly been attempted till Ruskin dared it in this 
 wonderful book ; wonderful alike in the audacity of 
 its enthusiasm, which defied all the most cherished 
 convictions of his day, and in its prophetic vision which 
 outran time and with the insight of true genius seems 
 to have foreshadowed future changes and heralded in 
 advance the deep movings of a national conscience, 
 tardily, but in our own days at least, unmistakably 
 awakening ; a wonderful book, too, it must be owned, 
 in its reckless disregard of self-consistency and its 
 defiance of the hard logic of fact. There is no mis- 
 taking Ruskin' s message, however ; it was delivered 
 with a lucidity born of passionate conviction ; with an 
 eloquence enriched by a wealth of metaphoric imagery 
 and biblical quotation, and with all the musical art of 
 
THE PROTEST OF RUSKIN 119 
 
 that poetic prose of which he was so supreme a master, 
 and the very beauty of which (as Ruskin himself 
 complained) often diverted men's attention from the 
 meaning of his message. As a treatise, it is true, it 
 possessed neither reasoned form nor scientific com- 
 pleteness ; but to his own generation at least its 
 contents were so wholly new and so subversive of 
 accepted canons, that it is well worth our while here to 
 recapitulate his principal contentions. 
 
 The contemporary science of Political Economy 
 was built, as it seemed to Ruskin' s generous mind, 
 upon a fundamental falsehood. Like a science of 
 gymnastics which should assume that men had no 
 skeletons, it undertook to examine the dealings of 
 man with man, and it left out his soul. At least, it 
 allowed for one side of it only, and that the worst 
 side. Thanks to this initial error, says Ruskin, the 
 man of business had come to believe that it was his 
 first duty to eliminate all the kindlier instincts and 
 emotions and that the first condition of success was to 
 be selfish. Society at large had not unnaturally 
 taken the man of business at his word and imagining 
 him at best to be a pure self-seeker, had come to rate 
 the commercial profession lower in its esteem than the 
 professions of the soldier, the clergyman, the doctor 
 and the lawyer. Ruskin pleaded for a revision of this 
 judgment ; he maintained that commerce was not 
 incompatible with Christian morality. The employer's 
 part was not of necessity to grind the faces of the poor 
 and depress wages to the lowest farthing. For him, 
 too, no less than to other men, there was a call to 
 nobler duties and loftier ideals than the interest of 
 self. In commerce, too, '* it is necessary to admit 
 the idea of occasional voluntary loss ; that sixpences 
 have to be lost as well as lives, under a sense of duty ; 
 that the market may have its martyrdoms as well as 
 the pulpit ; and trade its heroisms as well as war." 
 
120 NEW FALLACIES OF MIDAS 
 
 It was the precedent set by the " more honourable " 
 professions of the soldier, the doctor and the priest, 
 that furnished Ruskin with his main constructive 
 idea. Taking these for his model, he elaborated a new 
 principle upon which wages should be determined. 
 It is not, he argues, the way of the world to bargain 
 or haggle over a subaltern's pay ; " sick, we do not 
 inquire for a physician who takes less than half a 
 guinea ; litigious, we never think of reducing six and 
 eight-pence to four and sixpence ; caught in a shower, 
 we do not canvass the cabmen to find one who values, 
 his driving at less than sixpence a mile." Like every 
 one of these, the labourer in factory or coal pit is also 
 worthy of his turn ; his labour has an absolute value ; 
 and its price should be a settled and recognised price. 
 That price should not be affected either one way or the 
 other by the influence of supply and demand. What 
 have they to do with the value of a man's honest 
 labour ? ''I want a horseshoe for my horse ; twenty 
 smiths or twenty thousand smiths may be ready to 
 forge it ; their number does not in one atom's weight 
 affect the question of the equitable payment of the 
 one who does forge it." A service done, we should 
 reward it, whether it be done well or ill, by the same 
 fixed and level wage. For " a man's labour for a day 
 is a better standard of value than a measure of any 
 produce." 
 
 Ruskin did not imagine, however, that competition 
 could be altogether banished ; it will remain, but 
 under a different and healthier form. By our present 
 practice, *' according to the laws of demand and supply, 
 when two men are ready to do the work and only one 
 man wants to have it done, the two men underbid each 
 other for it ; and the one who gets it is underpaid. 
 But when two men want the work done and there is only 
 one man ready to do it, the two men who want it done 
 overbid each other and the workman is overpaid. 
 
THE PROTEST OF RUSKIN 121 
 
 But this, by Ruskin's method, could never happen ; 
 for the wage would no longer vary. Instead of this 
 selfish and suicidal competition by which one man is 
 forced to bid against his fellow we shall have an 
 honourable and salutary emulation. For the man 
 who does the Work well, will find employment, the 
 man who does it ill, wall not. The reward of the good 
 workman will no longer be the uncertain chance of 
 driving a closer bargain than his fellow, but the com- 
 fortable assurance of a settled livelihood. The bad 
 Workman for his part will sink to a lower grade of 
 employment. He will not work for the original 
 employer, but may be, for his more successful rival ; 
 for the latter (earning now a just and ample wage), 
 will have the wherewithal to satisfy new wants and 
 will be able to pay the inferior workman to provide 
 for their satisfaction. So it comes about that the good 
 money paid by the employer to the first workman 
 passes on from him to benefit the second also ; and 
 instead of two men* serving one employer at an unjust 
 price, we shall now have one man serving the employer 
 and another man serving the employed — and each 
 at a price which is just. 
 
 Many other things Ruskin has to say in " Unto This 
 Last," some which concern Political Economy and 
 others which do not ; neither need occupy us here. 
 His essays, as he himself says in the Preface, " were 
 reprobated in the most violent manner by most of the 
 readers they met with." The prophet had no honour 
 in his own generation. Nevertheless his teaching 
 sowed good seed. Its moral appeal went far deeper 
 than its logic. And when all its exaggerations, its 
 contradictions and its fantasticalities are discounted, 
 there remains much in what he said, which has left an 
 
 * Two men serving the employer because (as Rnslcin argues) bj^ his 
 under-payment of workman Number One, the employer will have saved 
 enough to employ workman Number Two as well. 
 
122 NEW FALLACIES OF MIDAS 
 
 enduring mark on the ideals and policies of the years 
 which have followed, 
 
 (ii.) 
 
 The heresy of yesterday is not seldom the orthodoxy 
 of to-day ; and, since Ruskin delivered his message to 
 deaf and stubborn ears, the world has travelled far 
 along the path he showed it. Ideals and standards 
 have changed ; the old indifference has vanished ; 
 and in theory at least, if not in practice, we have all 
 some sympathy to spare for the grievance of the 
 " sweated" labourer, some pity for the slum-dweller, 
 and the unemployed, and the *' submerged tenth." 
 Consistent perhaps we cannot always boast to be. 
 To purchase shirts or candles at the cheapest possible 
 price is thought fair game enough ; but to deal with 
 other men's labour in the same fashion seems some- 
 how different, and, though we are too prone to forget 
 how often cheap goods mean ill-paid labour, yet in 
 drawing this very distinction we give proof how far our 
 point of view has changed. For us human toil (and 
 the welfare of lives and families dependent on it) is not 
 a commodity like other commodities to be bandied to 
 and fro by the callous hucksters of a market. The 
 labourer, it is now remembered, is also a man, and not 
 an inanimate piece upon the economic chess-board. 
 Thus far at least Ruskin has won us to his way of 
 thinking, yet seeing how widely different is the England 
 of to-day from the ideal England which Ruskin had in 
 view, we cannot but ask ourselves whether or no his 
 schemes of reform, and in particular his scheme of the 
 level wage would be practicable or beneficial. 
 
 Now, if what Ruskin advocated was simply a 
 standardisation of wages, it may be said at once that 
 things have moved already some way in that direction. 
 Through the efforts of Trade Unions up and down the 
 country, some sort of agreement has been reached 
 
THE PROTEST OF RUSKIN 123 
 
 with masters ; and a particular price has been assigned 
 to a particular piece of work. The turning of a lathe, 
 the minding of a loom, the sorting out of coal lumps, 
 and even the laying of a brick have each their settled 
 price. But even in these organised trades it must be 
 admitted that there is still a wide divergence between 
 district and district, and it may be between neighbour- 
 ing workshops. There are many occupations, how- 
 ever, in which wages are not so regulated ; thus before 
 the Agricultural Legislation of 1917, the weekly 
 earnings of a farm labourer in different parts of the 
 country varied as widely as from twenty-two shillings 
 to twelve ; and it is the same with hundreds of lesser 
 jobs. In short, it is one of the chief duties of Labour 
 in the future to force such organised arrangements 
 upon employers, and defeat the inevitable tendency 
 of struggling workmen to undersell each other. 
 
 If, however, Ruskin imagined that by the system 
 of the level wage he would eliminate the inexorable 
 influence of demand and supply, he was very much 
 mistaken. For without reference to these it is im- 
 possible to set a value upon labour at all. Time, as 
 he himself admits, is no true standard. If a coal- 
 heaver works twelve hours to provide a Prime Minister 
 with coal, he cannot expect twelve hours of service in 
 return. A general's time is more precious than a 
 private's ; and ten minutes of a skilled physician's 
 thought is worth an apothecary' s fortnight. So Ruskin 
 falls back in due course upon the notion that skill must 
 be the basis of evaluation. Yet has skill a value on its 
 own account, or is it not of value just in so far as it 
 satisfies the needs of men ? A person may possess 
 great skill in the study of Hebrew dialects or in the 
 making of periwigs ; but if nobody shares his anti- 
 quarian zeal, or wishes to wear false hair, he could not 
 make a penny by either. In Ruskin's time there still 
 existed men and women who were experienced in the 
 
124 NEW FALLACIES OF MIDAS 
 
 use of the hand-loom ; their skill was undeniable, but 
 if it had been urged that they should continue to receive 
 their former takings, it would have been a puzzle where 
 to find the money. Skill even of the highest sort must 
 often go unrewarded, and the greatest epic in the 
 English language brought Milton five pounds for the 
 first edition. Ruskin no doubt would have been ready 
 to devise a scheme for the detection and reward of 
 unrecognised genius. But it would have taxed 
 Rhadamanthus himself to decide between all the rival 
 claims. The fact is that it is impossible to assess the 
 worth of all the various services of men, without reference 
 to the existing scales of values ; and that scale of 
 values is at bottom based upon supply and demand. 
 The claim of the skilful to receive more than the 
 unskilful lies in their rarity and nothing else. If 
 schoolmasters receive better pay for teaching Greek 
 than for teaching the alphabet, it is because few men 
 have the opportunity of taking a classical degree, and 
 of these fewer still have the taste or the capacity for 
 teaching. If by some miracle all the babies born since 
 1850 had been natural Greek scholars and instinctive 
 pedagogues, it is more than probable that scholastic 
 salaries would be lower than they are. But (to take 
 a less fantastic supposition) let us suppose that a mine 
 is opened in South Africa which works for three years 
 without disaster. At the end of the third year, half 
 the pit hands develop unmistakable symptoms of 
 consumption ; and doctors impute the outbreak to the 
 condition of the mine. If there were no falling off next 
 year in the number of applicants for work, the directors 
 might be secretly surprised and gratified, but they 
 would certainly not raise the wages. If, however, 
 nobody applied, they would raise the wages (within 
 the compass of what the mine could itself afford) until 
 somebody did ; and the wage would settle at the precise 
 amount which would tempt workmen in sufficient 
 
THE PROTEST OF RUSKIN 125 
 
 numbers. Here, then, is a nice question for dis- 
 cussion, what value men will set upon the loss of a 
 lung, a question to which no Board of Assessors that 
 ever sat could offer an adequate solution ; but a 
 question which is solved easily enough by the practical 
 arithmetic of supply and demand. 
 
 Thus any attempt to fix the value of work by any 
 arbitrary standard will be fraught with real and almost 
 insurmountable difficulties. Even if the standard 
 were satisfactorily settled now it would be out of date 
 in a few years time. There will be changes in men's 
 habits and ambitions, changes in their taste for one 
 sort of work and distaste for another, changes in the 
 productiveness of their labour and in the cost of living. 
 None of these factors but will have an influence upon 
 the question of their remuneration. Some of these 
 factors no trained assessor could foresee or compute ; 
 others have, in the past and present, proved a 
 stumbling block to practical reformers. If, for 
 example, women are to be absorbed into a new branch 
 of industry, it is no easy problem to decide whether 
 they shall enjoy the same rates of pay as men, or 
 whether the men's labour will depreciate in value. 
 Again, the cost of living varies in different parts of 
 England, and although the wages of both are fixed at 
 the same rate, an artisan in one district will be better 
 off than his fellow in another. In each of these two 
 cases the influence of Supply and Demand will creep 
 in and upset the justice of our calculations. To 
 evade them altogether seems difficult if not impossible, 
 but the most striking illustration of the difficulty is 
 to be found in the problem of the minimum wage — a 
 reform which approximates perhaps most nearly to 
 Ruskin's own suggestion. Let us suppose, that 
 a minimum wage is promised to the men of the 
 Welsh coal fields ; in consequence of the increased 
 drain on their resources many owners find that the 
 
126 NEW FALLACIES OF MIDAS 
 
 profits of their mine are reduced to nothing, so the 
 mines are closed. Or, again, suppose a manufacturer 
 of toys agrees to pay his Workmen a wage of thirty 
 shillings, in order to make a clear profit, he is then 
 forced to raise the price of his toys, and soon he will 
 find that he is undersold by cheap toys coming from 
 abroad, where toy makers subsist upon a pound. So, 
 unless a State Bounty or a Protective Tariff comes in to 
 save him, his trade is ruined. Perhaps it may be as 
 well to put an end to mines or industries which are 
 either so unproductive or so badly managed that the 
 employer cannot afford to pay their workers a living 
 wage and at the same time hold their own in compe- 
 tition ; but it may equally be argued that, when the 
 workers of a nation claim for themselves a high 
 standard of living and yet fail by the quality of their 
 work to justify that claim, the nation must go under. 
 Their goods will become too dear to find a market ; 
 their trade will vanish and with it the very means, I 
 will not say to live at the high standard they have set, 
 but even to live at all. In short, their defiance of 
 supply and demand will be to court disaster, for the 
 old mole working below the surface will be the undoing 
 of them yet. 
 
 Yet in speaking of the minimum wage, there is 
 another possibility of which we must take account, 
 and which may even reveal it in a better light as a 
 practical and salutary reform. Ruskin struck upon 
 a truth which went even deeper than perhaps he 
 knew, when he described the benefits of paying a 
 " just " wage. It is better, he said, that one workman 
 should receive an ample wage and therewith engage 
 the services of another than that both of them should 
 work for one employer at an insufficient wage. There 
 is no doubt that it is better, and often the raising of 
 wages to a higher level may be a stimulus to industry 
 and not a drag — and this in two ways. First, then, it 
 
THE PROTEST OF RUSKIN 127 
 
 is obvious that the wage-earners' power of purchase 
 will be thereby increased. He will have more to 
 spend ; he will discover new wants to satisfy, and 
 other workmen will be called upon to produce for the 
 satisfaction of those wants. Now, as we have seen 
 above, the great need of the world is to produce more 
 plentifully and more cheaply. If man chooses, he can, 
 by the exercise of his wits no less than by the exertion 
 of his body, devise more rapid and more fruitful 
 methods of production than he has in the past employed. 
 But he needs some stimulus to do so ; and the best 
 stimulus of all is a declared and obvious demand. 
 Men will not produce unless they are certain that 
 others will consume ; therefore the best means to 
 quicken the producer's energy is to increase the con- 
 sumer's power of purchase. So the universal minimum 
 wage, though in the long run it must be expected to 
 cause a general rise in prices, may in the meanwhile 
 have done its work by improving man s industrial 
 methods, drawing out his inventive faculty and 
 infusing, as it were, fresh blood into the languishing 
 body of commerce. But besides the stimulus which 
 the minimum wage may give to industry as a whole, it 
 may prove a more particular advantage to the trade 
 which it immediately concerns. Nothing is more 
 strange than the persistent blindness of employers to 
 the very obvious fact that ill-paid labour does not pay. 
 A worker who is badly kept and poorly fed cannot in 
 reason be expected to perform the best work of which 
 he is capable. The most crying scandal of the nine- 
 teenth century is the ill-health of our urban populations 
 and the deterioration of the national physique. Girls 
 and boys who are brought up on insufficient nourish- 
 ment, represent so much loss of economic power to the 
 community. Men and women who are compelled to 
 labour under distressing or insanitary conditions are 
 wasting that vital energy which is the nation's most 
 
128 NEW FALLACIES OF MIDAS 
 
 precious capital. It has now been abundantly proved 
 in our Colonies, in America, and at last perhaps still 
 nearer home, that the best investment which an 
 employer can make, is the money spent upon the health 
 and happiness of his employees. Whatever he can do 
 to ease the tedium of the work, to make surroundings 
 healthy and cheerful, and even to provide relaxation for 
 mind and body, will repay him handsomely in the 
 increased output of his industry. He will have at his 
 command both more efficient and more willing 
 workers ; and the goodwill of his men is the most 
 valued asset of the wise employer. How much more 
 it is essential to pay not a " living wage " indeed, but 
 such a wage as will offer the highest possible return in 
 increased efficiency, is a lesson which has been learnt 
 too slowly, but which now perhaps is beginning to be 
 learnt at last. 
 
 If, however, we are to conclude that this is all that 
 Ruskin meant, we have strangely mistaken the 
 purpose of his message. He is not one to advocate 
 philanthrophy because it is profitable to the philan- 
 thropist. Morality and self-interest, however fre- ^ 
 quently they may go hand in hand, are not to be 
 confounded. Despite the worldly-wise counsel of 
 proverbial wisdom, traders are not meant to be honest 
 because it is the best policy, nor employers to be kind 
 simply because it pays. There is a moral obligation, 
 too, as well in one case as in the other ; and in his heart 
 of hearts there is no sane person but acknowledges its 
 claim. When we speak of" fair " prices and " just " 
 wages we mean something more than a cant piirase. 
 In trading men have obligations as well as privileges, 
 duties as well as rights. For just as in the demo- 
 cratic state all are in part governors and in part 
 governed, so in the economic body all are in part 
 consumers, and all (or nearly all) in part producers. 
 And so, when we are tempted to gloze over the conflict 
 
THE PROTEST OF RUSKIN 129 
 
 between our own interest and our neighbour's and 
 excuse an unfair gain which is another's loss, we 
 should do well to remember this common tie of mutual 
 service and mutual dependence. Buying and selling, 
 producing and consuming, we are all involved in one 
 universal game ; and by an unspoken instinct at least, 
 if not by compact, we all agreed that this game should 
 be played according to the rules. So we have come to 
 speak of a bargain as fair or unfair, not because the 
 value of this or that is determined by ethics, or depends 
 upon some abstract standard of right or wrong, but 
 because each, knowing his power as a producer, is 
 minded to use it with restraint upon condition that 
 his fellows should do likewise. Madam Do-as-you- 
 would-be-done-by holds authority in trade no less than 
 in other spheres of human intercourse. In our social 
 and political life we have long since learnt to reject the 
 principle of " might is right " — but we have still to 
 learn that economic power is not given us for ex- 
 ploitation and naisuse, and that the Ten Command- 
 naents do not cease to be operative behind the counting- 
 house door. 
 
 To reconcile the selfish clainis of economic interest 
 with the altruistic ideals of moral obUgation must 
 always be a difficult task — but most difficult of all 
 perhaps for the employer. For his responsibility is 
 heavier than all others. The man who holds such power 
 for good or evil over the lives of hundreds, or it may be 
 thousands of his fellow beings, cannot shirk the respon- 
 sibiHty of that tremendous trust. He owes it to them 
 and to himself and to the State that this trust shall be 
 discharged according to the measure of his powers 
 and his opportunity. The more honour to him if he 
 discharges it well. The market, as Ruskin says, " may 
 have its niartyrdoms as well as the pulpit, and trade 
 its heroism as well as war." This is in truth a hard 
 saying ; but the precepts of all high moralities are 
 
130 NEW FALLACIES OF MIDAS 
 
 hard. It may seem as though the exigencies of busi- 
 ness leave little loophole for the exercise of Christian 
 virtues and that every act of buying and selling must 
 clash with the Sermon on the Mount. Yet in reality 
 this conflict between duty of sacrifice and the interests of 
 self are by no means confined to Trade. In every 
 phase of life there are claims and counter-claims, both 
 of them legitimate, yet competing for our allegiance 
 and haling us two ways. The claims of the family 
 may conflict with claims of the community, the 
 conscience of the individual with prerogatives of State, 
 loyalty to Party with obedience to a wider call. There 
 is little or no direct guidance in Scripture or elsewhere 
 to tell us which of the two should be obeyed or how 
 far ; there are no cut and dried formulse, by which 
 these puzzles may be solved. Even the most pious 
 priest must balance the satisfaction of his own needs 
 against the satisfaction of the needs of others. Does 
 he starve himself to feed the poor, who will be left to 
 read the services in church ? If he gives up his whole 
 day to parochial ministrations where will he find time 
 for the study of theology, or for intellectual and physical 
 relaxation which is needed to keep his body fit and his 
 mind alert ? So too the man of business may honestly 
 maintain that a motor-car and a comfortable house are 
 an indispensable to the efficient performance of his 
 duties-^and, in general, the problems which beset his 
 path are different only in degree from the problems 
 which beset the path of others. To keep up " appear- 
 ances " to enter society, educate his children and 
 cultivate his mind ; all these are legitimate claims 
 upon his purse ; and so long as he shows generosity 
 and fairness in his business dealings and decent moder- 
 ation in his private habits, his employees v;ill be the 
 last to grudge him the satisfaction of such claims. 
 But the counter-claim still stands — there is the welfare 
 of those whom he employs to be considered. If claim 
 
THE PROTEST OF RUSKIN 131 
 
 and counter-claim can both be satisfied, no more need 
 be said. But if there is a clash of interests and one or 
 the other must be sacrificed, then a balance must be 
 struck and a choice be made — and we cannot in good 
 conscience make that choice upon any but the highest 
 grounds. It is for each to see that his eye is single in 
 the choosing and that he uses no weighted scales. 
 
Chapter XII. 
 
 THE RISE OF LABOUR. 
 
 But something more forcible than Ruskin's good 
 advice was needed to bring the employers to a better 
 frame of mind ; and instead of waiting their conversion, 
 whether to Christianity or to common sense, the 
 Workers were engaged in forging a weapon of their 
 own, and that weapon was the strike. If it is the poor 
 man's necessity to offer his labour in exchange for 
 daily bread, it is no less his liberty to refuse it. In so 
 doing, he commits no wrong. He is under no obH- 
 gation to work, if he prefers to starve ; nor is he bound 
 by any life-long contract such as circumstances im- 
 posed upon the slave or serf. In theory at least the 
 modern labourer is a free man ; and whether or no 
 it be a wise policy for him to withhold his labour, he 
 certainly has as much right to do so, as the farmer to 
 withhold his pig from market. The Strike then is in 
 essence neither anarchy nor crime ; it is simply the 
 normal weapon of one party to a bargain.* It suffers, it 
 is true, from one natural and fundamental weakness, in 
 that the employer is in possession of the necessities of life 
 and the labourer is not. So his bargaining power must 
 always be weaker, man for man, than is his master's, at 
 worst he is wholly at the other's mercy, as the starving 
 man is at the mercy of the man with bread. At best 
 he is still fighting an unequal battle, as with blunder- 
 
 * Whether the right to strike may not ultimately develop into a 
 dangerous form of monopoly, is another matter — to be discussed 
 hereafter. 
 
 132 
 
THE RISE OF LABOUR 133 
 
 buss against gun. One thing, however, he may do 
 to redress the balance ; he may persuade his fellows 
 to concerted action. Unity is strength ; and, taken 
 in combination, the bargaining power of the workers 
 may become equal, perhaps superior to the bargaining 
 power of the employer. For, though the employer 
 may suffer no serious damage by the loss of a particu- 
 lar workman, it must mean ultimate disaster if 
 nobody will work for him at all. So from the first it 
 has been the worker's desire to promote, as it has been 
 (until recent years) the employer's desire to restrict, 
 the use of industrial combination. 
 
 Until after Waterloo was fought, and the old order 
 of things had passed definitely away, the power of the 
 employer held the field unchallenged. During the 
 latter half of the preceding century, those new pro- 
 cesses of manufacture which brought the Industrial 
 Revolution into being, had not merely begun to spread 
 terrible distress among the workers, but had indirectly 
 caused a serious infringement of their rights and 
 liberties. The introduction of new processes of manu- 
 facture had led to the widespread employment of 
 children and women, and this had very naturally 
 aroused the resentment of the adult workers who found 
 themselves, temporarily at least, displaced. By way 
 of protest they appealed to the Statute of Apprentices, 
 an obsolete law of Queen Elizabeth's reign ; and they 
 even attempted by some sort of combination to 
 enforce its observance. But the employers went one 
 better ; and in the last year of the century secured the 
 passage of a law by which all such combination " in 
 restraint of trade " was positively forbidden. But 
 such repressive measures could hardly be permanent. 
 More and more the workers became sensible of the 
 vileness of their own condition, of the glaring contrast 
 between poverty and wealth, and of the inhuman 
 attitude of their masters. And along with this growing 
 
134 NEW FALLACIES OF MIDAS 
 
 discontent, came new and wider opportunities for 
 concerted action. Crowded together into the centres 
 of trade and industry, they were now better able to take 
 counsel together than they had been when scattered 
 among the villages and country towns. Education 
 too, was slowly but surely spreading ; men began to 
 think for themselves ; and ideas bred by the success of 
 the French Revolution were taking root downwards. 
 A bitterness sprang up between rich and poor which, 
 as the century wore on and democracy matured, was 
 to develop into a definite antagonism and to range the 
 classes in two hostile camps. 
 
 Oddly enough, however, it was to the men of the 
 school of Adam Smith that the workers first owed 
 their deliverance. In 1824 these champions of 
 economic freedom extorted from an unwilling Parlia- 
 ment the Repeal of the Combination Laws. The 
 workers were now free to combine (though only it is 
 true for peaceable discussions), and with that the 
 history of Trade Unionism began. Though the 
 earliest attempts at combination were short-lived, there 
 arose in the course of the Forties several sturdy associ- 
 ations, which survived in the face of much difficulty 
 and opposition, and many of which (such as the 
 Operative Bricklayers' Society and the Amalgamated 
 Society of Engineers) are still in being and are known 
 as the Old Unions. As yet, however, the battle was 
 only half won. The Repeal of the Combination Laws, 
 while it allowed men to associate in Unions for the 
 discussion of wages and working hours, had yet given 
 the Unions no legal status and no protection for their 
 funds. One Justice of Queen's Bench openly hinted 
 that all combination to raise wages, were its methods 
 never so peaceful, was a conspiracy and a crimic before 
 the law. Such opinions were little likely to conciliate 
 the workers ; and by i860 the Trade Unionists were 
 beginning to act with increasing violence. In Sheffield 
 
THE RISE OF LABOUR 135 
 
 a gunpowder explosion was traced to their agency, 
 and a certain saw-grinder, James Lindley by name, 
 was murdered by a shot from an air-gun, for breaking 
 the regulations of his Union. The country was 
 seriously perturbed. A Royal Commission was 
 appointed ; and in the sequel the cause of labour won 
 a substantial victory. By the Acts of 1871 and 1875 
 the position of Trades Unions and in particular their 
 right to hold land and accumulate funds, was formally 
 recognised by law. These funds might now be used 
 at the Unionists' discretion, on condition that an 
 annual account of them was presented to the Public 
 Registrar. And, provided that the Unions committed 
 no act which in a private citizen Would be punishable 
 as crime, they were henceforward free to pursue what 
 policy they chose. The Charter of Labour was now 
 won ; and the efhcacy of combination definitely 
 assured, with the natural result that in the last quarter 
 of the century the number of the Unions was nearly 
 doubled. These new Unions passed rapidly from 
 strength to strength ; they found leaders of energy 
 and resolution in such men as John Burns, Ben Tillett 
 and Tom Mann, the trio who first won their spurs in the 
 great Dock Strike of 1885. By continuous warfare the 
 Unions quickly gained ground, consolidated their 
 position and reinforced their ranks. Since the turn of 
 the century the actual number of Unions has diminished, 
 but their membership has increased by leaps and 
 bounds. From upwards of two millions it rose in a 
 dozen years to four ; there are perhaps nearer five 
 million unionists, male and female, in the country at 
 the present day. All the best-paid trades are 
 organised ; miners, bricklayers, boiler-makers, ship 
 builders, bootmakers, gas- workers, engineers and 
 transport workers, beside a host of others — and even 
 before the war they were among the most powerful 
 forces in the country, and by constant pressure they 
 
 10 
 
I36 NEW FALLACIES OF MIDAS 
 
 had again and again defeated the employers and won 
 substantial improvement of their lot. But such a 
 strong and resolute movement was not likely to con- 
 fine its energies for long to the industrial sphere alone 
 — and through their Parliamentary representatives 
 they had entered the political arena. The Labour 
 Party, though numerically weak, made deft use of its 
 alliance with the Liberal coalition, and during the first 
 decade of the century it was not without its triumphs. 
 It has emerged from the crisis of war more formidable 
 than ever. At first suspected and despised on account 
 of the pacifist tendencies of its leading members, it 
 has insisted upon making the voice of Labour heard, 
 and when the grievances and even threats of the in- 
 dustrial population could no longer be ignored, a 
 Ministry of Labour was established ; the Labour Party 
 was granted a place in the Cabinet of five ; and who 
 shall say what part it may not play even yet in shaping 
 the future course of English or European history. 
 
 This political achievement was the fruit of the New 
 Unionism rather than the Old. The senior societies 
 founded in Mid- Victorian times had been content to 
 leave politics alone. They had endeavoured to improve 
 the workers' lot chiefly in two ways, first by bringing 
 direct pressure to bear on the employers, presenting 
 their demands for better conditions, higher wages and 
 shorter hours, and finally enforcing them by strike or 
 threat of strike ; secondly, by organising mutual 
 assistance and insurance among the workers themselves, 
 forming Benefit Funds, and out of these relieving the 
 victims of accident, disease or unemployment. But 
 for a very good reason this second aim became dis- 
 credited among the newer Unionists. The heavy 
 inroads which the benefit payments might make upon 
 the Union funds, were liable to drain their resources 
 and reduce their fighting strength. In 1900 the danger 
 of financial exhaustion was further increased by the Taff , 
 
THE RISE OF LABOUR 137 
 
 Vale Decision. A strike had broken out on the Taff 
 Vale Railway, and the company took legal proceedings 
 against the men for the damage done in the strike. 
 The case was carried from court to court ; and finally 
 the House of Lords decided that a registered Union 
 might be sued at law and was itself Hable for injuries 
 inflicted by its members. The decision involved a 
 new menace to Union funds, and, pending its reversal, 
 the argument for abandoning the expenditure on 
 benefits was overwhelming. The upshot was that a 
 fresh impetus was given to the alternative policy upon 
 which the new Unions had already embarked. This 
 policy, as we have shown above, aimed at reinforcing 
 industrial pressure by parliamentary action, and at 
 achieving by public legislation what private bargain- 
 ing could not secure them. Extravagant hopes of 
 speedy victory were at first entertained, but were 
 doomed to inevitable disappointment. The repre- 
 sentatives of Labour formed but a mere handful in the 
 House of Commons ; and even these lacked ripe 
 experience for the difficult game of politics. None 
 the less, whether through the direct agency of the party 
 or whether because the new crusade focussed public 
 attention more closely on industrial problems, their 
 efforts were by no means barren. During the last 
 twenty years Act upon Act had been passed, reforming 
 and regulating the relations between Capital and 
 Labour. Under the Employers' Liability Act masters 
 are bound to compensate their men for injuries received 
 in carrying out their duties. This and the institution 
 of Old Age Pensions have removed the more pressing 
 needs for Benefit Funds. Under the Insurance Act 
 the members of certain trades are now compulsorily 
 insured against unemployment. Many gross abuses 
 have been done away. In some ill-paid or " sweated " 
 industries (such for instance as that of chain-making) 
 the payment of a " hving wage " has been enforced. 
 
138 NEW FALLACIES OF MIDAS 
 
 Even when the Welsh miners, a far more prosperous 
 class, struck for a minimum wage, their victory was 
 blessed by the sanction of the law. The Board of 
 Trade has bestirred itself to mitigate the evils of un- 
 employment and industrial strife (though not always 
 in the way which Labour itself would choose). Sir 
 George Askwith and its other representatives are 
 constantly at their work of reconciliation and arbi- 
 tration in disputes. Labour bureaux of information 
 have been established up and down the country to 
 remedy the frequent hardships of fluctuating and 
 intermittent trades. Acts have been passed providing 
 for Insurance against ill-health or unemployment, and 
 for compensation in case of accidents or injury. One 
 way and another, Politics have played no small part 
 in industrial evolution ; and at the present time 
 Parliament seems to offer greater scope than ever for 
 the supporters and representatives of Labour. Though 
 before the war their party was losing caste with the 
 rank and file, and disappointed prophets declared it to 
 be a failure, the day does not now seem so very far 
 distant when a Labour Ministry may be seated upon 
 the Treasury Bench. 
 
 (ii.) 
 
 But the success which Labour has hitherto achieved 
 has not been won without much careful thought and 
 elaborate organisation. It is only in recent years that 
 the full possibilities of the movement have been 
 realised ; and in the meantime both parties in the 
 conflict have been busy improving their methods and 
 enlarging their resources. The employers on their part 
 have not been idle. Seeing how the industrial pressure 
 of strikes and agitation was increasing and how through 
 its Parliamentary agents Labour had begun to lay a 
 faltering hand even upon the reins of political power, 
 they could no longer be indifferent to this double 
 
^ 
 
 THE RISE OF LABOUR 139 
 
 menace. In the early days of Trades Union history, 
 the employers' chief safeguard had been the numerical 
 weakness of the Unionists themselves. So long as a 
 small fraction only of the men were combined against 
 them the capitalists felt little cause for real anxiety. 
 They needed but to count the cost before embarking 
 upon a trial of strength and decide whether the 
 temporary dislocation of business was worth their 
 while ; the final issue of the struggle was hardly in 
 question. There existed still a vast reservoir of 
 unorganised labour, upon which they could draw to 
 fill the places of recalcitrant unionists ; and, while 
 '' black leg " labour was plentiful, no Union could hope 
 for complete or permanent success. But, as time went 
 on, and the Unions multiplied exceedingly, employers 
 took alarm ; and though the strength of organised 
 labour is still numerically weak (even to-day it counts 
 for barely a third of the industrial population) it was 
 felt that the time had come for counter measures. As 
 for the men, so equally for the masters, the wisest 
 tactics were to close their ranks. Combination can 
 best be met by combination. The Employers' Lock- 
 out is the obvious answer to the workman's strike. 
 
 In prosperous, chaotic, easy-going England the 
 process of combination has been slow ; employers 
 clinging to their traditional belief in economic liberty 
 and unrestricted competition, have been loth to tie 
 their hands. But among other nations, to whom the 
 discipline of centralised authority is less distasteful, 
 developments have been more rapid and deliberate. 
 In Sweden, for example, the two opposing parties are 
 now entrenched in two solid Federations, all the 
 employers on one side, upwards of half the working 
 population on the other. Upon the first hint of serious 
 trouble the employers mobilise their forces for a general 
 lock-out. In 1906 they won the day merely by threat 
 of action. In 1909 the Unions replied by declaring 
 
140 NEW FALLACIES OF MIDAS 
 
 a general strike. The moment was ill chosen ; trade 
 happened at the time to be bad ; so it suited the em- 
 ployers' book to close the workshops and the men were 
 easily defeated. In other countries, too, analogous 
 developments have taken place ; in well-drilled 
 Germany the unions of employers known as Kartels, 
 have gained considerable power. But, here in England 
 open organisation has hardly been attempted. Never- 
 theless, as the strength and unity of the Labour 
 movement grows, a similar policy will certainly be 
 forced upon our manufacturers. They can no longer 
 afford the luxury of their old independence. * 
 
 For the Unions, on their part, have not been slow 
 to see the advantages of closer co-operation. Up to the 
 present there is indeed no central body to direct and 
 co-ordinate the policy of the whole movement. Such a 
 function is very inadequately performed by the Trades 
 Union Congress, half committee which formulates the 
 course of Labour's political campaign, half debating 
 society, where academic resolutions are discussed and 
 enthusiasts can air their high-flown and fanciful 
 ideals. On the other hand, some practical steps have 
 been taken to draw the bonds together ; alliances have 
 already been formed between various unions some- 
 times by complete fusion or amalgamation (such as took 
 place in recent years between three out of the four 
 great Railway Unions), sometimes by a more tentative 
 policy of federation. In the first year of the war, 
 for instance, the three powerful societies of the Rail- 
 way men, the Coalminers and the Transport Workers, 
 entered upon a mutual agreement for united action. 
 But there are so many objections and obstacles to such 
 a course, that complete solidarity is still very far from 
 
 * Within the last twelve months very decided steps have been 
 already taken. The prospect of post-bellum competition against 
 Germany has stirred the employers to combination far more than the 
 threats of Labour could have done. 
 
THE RISE OF LABOUR 141 
 
 being realised. In the first place, centralisation of 
 any sort means officials ; and officialdom has never been 
 popular with Englishmen. Unless the methods of 
 election and representation are constantly revised, 
 the leaders lose touch with the men ; they fail of the 
 vigour and audacity needed for constructive action ; 
 and Trade Unionism may very easily become as sterile 
 and inert as any political bureaucracy. Worse still, 
 there is not seldom jealousy between different trades ; 
 and, as is only natural, every union is loth to involve 
 itself in troubles which are not its own. Finally, as we 
 have Said already, the unions are far from having the 
 whole force of labour at their back. Partly from 
 ignorance of their value, partly from distrust of their 
 methods, and dislike of the restrictions they impose, 
 even more from inability to pay the subscription to the 
 Union funds, the large mass of workers still remains 
 outside. All manners of efforts have been made to induce 
 them to come in. Those who are members already 
 are forbidden in any way to assist non-unionists, often 
 to work with non-unionists, and even (during strikes) 
 to touch goods which non-unionists have handled. In 
 season and out of season, by fair methods and foul, 
 the Gospel of Unionism has been preached that by 
 whatever means converts may be brought into the fold. 
 During a strike a black-leg labourer is made to go in 
 terror of his life ; and even the " peaceful picketing " 
 allowed by law can often be a very formidable method of 
 of coercion. Such tactics, it is true, are a grievous 
 violation of the independent labourer's liberties and 
 rights. The Unions are hard task-masters ; their rules 
 place most tyrannical restrictions not merely upon the 
 output of each member's work, but upon the amount of 
 each member's wage. There may seem, perhaps, small 
 justice in compelling others to submit, against their 
 will and, as they think, against their interest, to such 
 arbitrary regulations. But from the Unionist's point 
 
142 NEW FALLACIES OF MIDAS 
 
 of view the non-Unionist is to blame, not he. Who- 
 ever underbids his fellow is considered a traitor to the 
 sacred cause. Whether the non-unionist does 
 unionist's work at a smaller wage, or whether he does 
 more work than the unionist at the same wage, it is all 
 one. He is playing the employer's game, and stealing 
 a march unfairly upon comrades whose interest should 
 also be his interest, and whose cause his cause. And to 
 make his crime the blacker, he is often enjoying the 
 better conditions, better wages and better hours which 
 are the hard won fruits of Unionists' exertions. It 
 seems a coward's part to profit by the battles which 
 others have fought and won, and himself to stand 
 aside. 
 
 When, therefore, the Unions set limitations upon 
 work and pay, it is not from pure jealousy of the keen 
 and strenuous workman. The Unionist is not the fool 
 that some people imagine ; and in most cases a reason 
 well thought out underlies his seemingly irrational 
 procedure. He has fought hard and long for the 
 improvement of his wages and now — a far more subtle 
 and complex task — his effort is mainly centred upon 
 the improvement of his conditions. In this struggle 
 constant vigilance and foresight will be needed, or 
 he will be thwarted at every turn by the employers. 
 Suppose, for example, that he contrives to limit the 
 hours of the working-day. The employer at once shifts 
 his ground and offers extra pay for overtime work. 
 How unreasonable of the Unions to prevent the sturdy 
 workman from thus adding to his wage ! Yet is it ? 
 Who can say that his gain may not be another's loss ? 
 His extra work may enable the employer to dispense 
 with the services of the less active. It is probable, too, 
 that in the long run wages themselves will be affected. 
 The employer will not be able to afford to pay more for 
 ten hours' work than he has done in the past ; and 
 those who can work but eight will be the first to suffer. 
 
THE RISE OF LABOUR 143 
 
 So to protect the weaker brethren who would thus be 
 put to a serious disadvantage and perhaps lose their 
 places altogether, the Unionists may be forced to set 
 some limit to this practice and curtail the oppor- 
 tunities for overtime for all alike.* Again, to the 
 outsider, it seems mere commonsense that when for 
 some reason the hands in one department are idle, 
 their labour should be used in some other department 
 or on some other process. But the normal performers 
 of that process do not regard it in that light. They 
 merely see their own skill set at a discount, their 
 monopoly threatened and themselves perhaps in the 
 issue driven out of employment. So Unionists are 
 naturally jealous not only of their rights as against the 
 employer, but as against the non-unionists as well — 
 and in self-defence they have built up a whole network 
 of usages and regulations some actually recorded on 
 paper, some handed down by tradition. These regu- 
 lations differ from district to district, often from shop 
 to shop. They were well described by a corres- 
 pondent in the Times of January, 19 17, as follows : 
 *' They embrace," he said, " not only the standard 
 rate of wages, and the length of the normal working day, 
 together with arrangements for overtime, night work, 
 Sunday duty, mealtimes and holidays, but also the 
 exact class of operatives (apprenticed, or skilled, semi- 
 skilled or unskilled, labourers or women) to be engaged 
 or not engaged for various kinds of work, upon particu- 
 lar processes, or with different types of machine ; 
 whether non-unionists should be employed at all ; what 
 processes should be employed for particular tasks ; 
 what machines should be used for particular jobs ; how 
 machines should be placed in relation to each other, 
 
 * Unionists' opinions differ on this point, some being in favour of 
 restricting " overtime " work, others opposing such restriction. 
 Certainly whatever may be urged on behalf of Trades Union action, 
 there is a most real danger lest it should in this matter at least, damp 
 the ardour and check the ambitions of the genuine hard-worker. 
 
144 NEW FALLACIES OF MIDAS 
 
 and the speed at which they should be worked ; 
 whether one operative should complete a whole job, 
 or attend only to one machine or form part of a team 
 of specialised operatives each doing a different process ; 
 what wages, if any, should be paid in the intervals 
 between jobs, or whilst waiting for material, and what 
 notice of termination of engagement should be given ; 
 whether boys and girls or young persons should be 
 employed at all, or in what processes or with what 
 machines, or in what proportion to adult workmen ; 
 whether remuneration should be by time or by the 
 piece, and under what conditions, at what rates or with 
 what allowances ; and- — perhaps where it prevailed 
 most severely criticised of all, but by no means 
 universally existing — what amount of output by each 
 operative should be considered a fair day's work, not to 
 be considerably exceeded under penalty of the serious 
 displeasure of the workshop." 
 
 These and other like concessions wrung from the 
 master by the men, or imposed by the men upon their 
 fellows, are a striking testimony to the success of Trades 
 Union action, but it must not be forgotten that this 
 success was double-edged. Upon the one hand, it is 
 true, that by nearly a century of effort a marvellous 
 transformation has been wrought in the status of the 
 working man. But see also how damaging has been 
 the cost. In the article above quoted, it was pointed 
 out how much production suffered from these hamper- 
 ing restrictions ; and how immense has been the gain 
 when under stress of war such practices are largely 
 swept away. No sooner was the check removed from 
 individual effort, no sooner was prejudice and torpor 
 replaced by energy and goodwill, new machinery intro- 
 duced and old machinery reconstructed or improved, 
 than production increased with giant strides. Already 
 in eighteen months after the Ministry of Munitions was 
 first established, a new Industrial Revolution had taken 
 
THE RISE OF LABOUR 145 
 
 place ; and the 20,000 establishments Working under 
 Government control were *' turning out on an average 
 more than twice the product per operative that they 
 did before the war." However workmen may grumble 
 against employers' profits, whatever they may think 
 about the unequal distribution of the spoils, such 
 an increase could not but redound to their gain, such 
 retardation as had existed, could not but mean their 
 loss. 
 
 Nor was this the only defect which marred the 
 success of Unionist achievement. Even the proudest 
 victory may in the event look very like defeat. The 
 minimum wage, for instance, turns out in practice to be 
 no unmixed blessing ; for, if the employer is forced to 
 pay a statutory wage, he will require in compensation 
 a full and adequate return in work ; to retain the 
 services of old, weak, or inefficient workmen will not 
 be worth his while ; and so, what is gain to some 
 unionists, brings dismissal and penury to others. 
 Even strikes, however triumphant, may mean time 
 wasted, markets lost, trade crippled. In the cotton 
 industry the cupidity of the workers looked at one time 
 like driving capital out of the business. Even pros- 
 perous owners will not embark on new and costly 
 ventures, if they know that a fresh demand for higher 
 wages will surely follow. Strugghng firms will shut 
 down rather than run their business at a loss. If 
 trade suffers so must the workman ; and if the work- 
 men are ready to " down tools " upon the smallest 
 provocation. Trade cannot prosper amid a state of 
 constant strikes. More deleterious still than open 
 warfare, are those subterranean tactics which go 
 under the common name of "ca' canny."* Instead of 
 
 * The term and the practice originated in the Building Trade. 
 Masons saw that (as there were only a certain number of houses 
 to be built) the quicker the job was done the longer would be the period 
 of unemployment that would follow. So they deliberately adopted the 
 plan of making the job last as long as they could, forbidding Union 
 
146 NEW FALLACIES OF MIDAS 
 
 declaring an open strike workmen will adopt the 
 insidious alternative of a " bad day's work for a bad 
 day's pay." They may even imitate the Italian 
 railwaymen, who threw the whole transport service 
 into utter confusion by literal obedience to the com- 
 panies' instructions ; or with a still more subtle irony, 
 they may do their work very slowly and do it very well.* 
 When in this way the operatives agree with one consent 
 to limit the output by deliberate slackness, the manage- 
 ment is helpless, profits drop, and yet the quarrel 
 cannot be brought to a clear issue, and once more the 
 workers suffer. Like the dog which lost his bone by 
 trying to catch its reflection in the water, Labour 
 has fixed its eye upon a shadow. To the more solid 
 benefits of maximum production it is blind. 
 
 Little wonder then that such violent methods find 
 small favour with a large section of the workers. 
 Partly from short-sighted ignorance, partly from the 
 sane conservatism of the British workman, there is a 
 dislike of pushing matters to extremes. Com- 
 promise and conciliation are, in general, more attractive 
 to them. They prefer to avoid open warfare, if 
 differences can be settled by diplomacy. The repre- 
 sentatives of masters and men may meet together, 
 grievances may be discussed, an ultimatum perhaps be 
 delivered. Each part}^ can compute the strength and 
 advantage of the other ; each knows what force it 
 holds in reserve itself. If war can be averted, it is to 
 the interest of both sides to avert it, and more often 
 than not, it is found possible to " agree with the 
 adversary in the way." The use of conciliation which 
 
 members to lay more than a fixed number of bricks per hour, etc. 
 There is always a danger that this form of protest may be used offen- 
 sively as well as for the more legitimate purpose of self-defence — and 
 in other industries where it might be even more effective and more 
 injurious to the public interest. 
 
 * This practice is known as ' sabotage ' or ' feet shuffling. ' 
 
THE RISE OF LABOUR 147 
 
 in countries like Australia has been forced by law, is in 
 England a natural growth. The relations between 
 masters and men are often cordial, sometimes there is a 
 mutual understanding and a reciprocal policy of " give 
 and take." The Boiler Makers and Iron and Steel 
 Shipbuilders' Society are even pledged to compensate 
 the masters for bad workmanship or breach of faith. 
 A similar agreement exists between the Engineers and 
 the employers of some districts, where good work is 
 rewarded by a premium bonus. But in general, such 
 evidence of mutual confidence is rare ; more fre- 
 quently such diplomacy is nothing but the velvet 
 glove. Labour means to come by its own, and beneath 
 the surface there is everywhere suspicion, distrust, and 
 preparation for a yet sterner fight. 
 
 (iii.) 
 
 Through whatever phases the industrial war may 
 pass, and whatever may be the immediate question in 
 dispute, the central issue is eternally the same — the issue 
 between the man who has property and the man who 
 has none. Until the close of the last century, the rate 
 of pay was the chief point over which the fight was 
 carried on. Then, as wages rose, and the cost of 
 living became less, the ground was shifted and in- 
 dustrial conditions were uppermost. But for all that, 
 the origin of discontent is not radically different ; and 
 it matters little whether the quarrel turns upon the 
 rate of wages or the conditions of employment. These 
 are but two sides to the same bargain. For a labouring 
 man may say, " Whatever work you set me, I will do 
 it, and what way you choose ; but the wage is not 
 sufficient, you must give me more," or alternatively 
 he may say, " I will be satisfied with the wage you 
 offer, but unless the character of the work is changed, 
 conditions improved and hours diminished, I will do 
 no work for you." It is all the same whether a man 
 
148 NEW FALLACIES OF MIDAS 
 
 demands a larger loaf for his sixpence, or claims to 
 receive the sixpenny loaf for fourpence half-penny. 
 So for Labour there is but one fundamental problem, 
 one grievance for ever unremoved. In a single word, 
 Labour feels itself to be exploited. It says, and it is 
 never tired of saying, that while the whole burden of 
 production falls upon its own shoulders, the profit 
 of production goes into the Capitalist's purse. Take 
 the case of a Company which employs women to turn 
 out ready-made shirts. The seamstress' wage is one 
 shilling a day ; the shareholders' annual dividend is 
 seventeen per cent. That is an actual case ; but 
 perhaps an uncommon one. So glaring a disproportion 
 between the shares of Capital and Labour may be 
 rare. But the proportion is not the point. Labour 
 declares that in every case the profits go to the wrong 
 man. It scorns compromise ; and it revolts from any 
 formula by which a just proportion might be fixed. 
 Not that it denies the value of Capital. How could it ? 
 No sane man would pretend that crops can be raised 
 without implements, boots or bicycles manufactured 
 without machines. All that Labour denies is the right 
 of individuals to turn Capital to profit. One man owns 
 a factory, a field, a mine. Other men till that field, 
 operate that factory, or dig that mine ; yet without 
 raising a finger to the work, or, at most, by sitting in 
 his office and ordering his foremen and managers about, 
 the owner by sheer right of possession annexes the 
 chief profits of their toil. If the price of corn or coal 
 rises, he alone reaps the benefit ; those who grew the 
 corn or raised the coal do not touch a penny of the 
 surplus. Labour's doctrine is not vague ; " Wherever 
 we look," it says, " we see the sources of production and 
 the means of production held as the monopoly of the 
 few. We see an idle, undeserving class (a half- 
 conscious exaggeration) battening upon an outward 
 privilege. In the sphere of politics oligarchic monopoly 
 
. THE RISE OF LABOUR 149 
 
 has had its day ; democracy and equal rights have 
 triumphed. But in the economic sphere, we are still 
 bound by the shackles of the industrial feudalism. 
 We, the rightful heirs to our country's rich resources, 
 are still shut out of our inheritance ; we have no more 
 share in the family wealth than if we were the family 
 slaves. For this there is but one remedy. Until the 
 monopoly is destroyed, and until the means and 
 sources of production are taken from the hands of the 
 usurpers, there can be for us neither compromise nor 
 peace." 
 
 All this is, of course, not the talk of the apathetic, 
 half contented millions ; but of the more progressive 
 and more vocal section of the Labour movement. 
 But if it seems to sound the tocsin of revolution, it is 
 not for all that a hare-brained or ill-considered scheme. 
 It is no mere catch-word philosophy which neither 
 means what it says nor says what it means. For 
 behind the inarticulate mass, who find in some ready- 
 made phrase a specious remedy for their distresses; 
 behind the noisy blusterers, who spout exag- 
 gerated half-truths in mass meetings or at street 
 corners, there are plenty of hard heads and busy 
 brains at work. There are men who read, discuss, 
 and think for themselves ; and out of their thoughts 
 they weave long-sighted altruistic schemes for the 
 regeneration of the world. They see past the petty 
 squabbles which concern a mere rise in wages, or a 
 point of work-shop discipline ; they look to the 
 ultimate goal towards which they conceive organised 
 labour to be moving ; they see the irresistible force 
 which the masses, aid they but present a united front, 
 might wield ; and first and foremost they are concerned 
 with the purpose to which that force may one fine day 
 be put. On one point they are generally agreed ; 
 by fair means or foul the sources and the means of 
 production must be taken from the Capitalist. But 
 
150 NEW FALLACIES OF MIDAS 
 
 (happily for the CapitaHst) they have fallen out among 
 themselves over the prospective division of the spoils ; 
 they cannot agree to whom the sources of production 
 should properly belong. One school contends that 
 they are the rightful heritage of the community at 
 large, and that the ownership of them should be vested 
 in the State. These are the Socialist School, or to 
 give them a stricter and less abused title, the Collec- 
 tivists. The rival school declares that the worker's 
 claim is supreme, and that they must own that which 
 derives its value from their labour alone. ** The mine 
 for the miners, the factory for the factory hands " is 
 the cry of those who for want of an English name 
 have borrowed one from France and are called the 
 Syndicalists. 
 
 The Socialists are first in the field. The bias towards 
 political action, which was the mark of the Newer 
 Unionism, naturally lent itself to the Collectivist 
 solution. If the best remedy for industrial troubles 
 is the intervention of the State, complete reform can 
 only come when the State has assumed complete 
 control. In the early nineties the so-called Inde- 
 pendent Labour Party headed the movement towards 
 the socialist ideal. At the Trade Union Congress held 
 at Norwich in 1894 a resolution was put forward to the 
 effect that " it was essential to the maintenance of 
 British industries to nationalise the land, the mines, 
 minerals and royalty rents." Mr. Keir Hardie pro- 
 posed an amendment to omit the v\rords, *' mines, 
 minerals, and royalty rents," and to substitute " the 
 whole means of production, distribution and exchange." 
 Here was the socialist gospel in a nutshell. The 
 amendment was supported by John Burns and Tom 
 Mann, and was carried by a large majority. Neverthe- 
 less, there were strong dissentients among Labour. 
 The representatives of the Old Unions were still a 
 vigorous and sturdy lot, placing more faith in indi- 
 
THE RISE OF LABOUR 151 
 
 vidual effort, self reliance and self-help than in all the 
 political nostrums of the Socialists. They maintained 
 that such vague recommendations were useless, as 
 being outside the range of all practical application. 
 They threatened to secede from the Congress, and 
 their resistance so far triumphed that Socialism has 
 gradually fallen into the background and such nebulous 
 proposals as Keir Har die's have ceased to appear on 
 the agenda of the Congress. The Socialist Members at 
 Westminster remained a handful of discredited cranks ; 
 few listen to them now ; and, although during the war, 
 the nationalisation of the Railways and the Mines — 
 that consummation once so eagerly awaited — has been 
 put to the test, it is doubtful whether the result of the 
 experiment will make men quite so eager for its 
 repetition in the future. 
 
 The fact is that the spell of Socialism was broken; 
 the old leadership had lost its hold ; the rank and file 
 were tired of their propaganda, as of a too familiar 
 tune ; and it needed something new to catch the ear. 
 At the same time a new restlessness was stirring in the 
 body of Labour. The last few years before the out- 
 break of the war were years of bitter fighting in the 
 industrial world. There were large strikes in plenty, 
 and threats of even larger.* The men were spoiHng 
 for a fight on whatever issue. The employees of the 
 North-Eastern Railway went out because a guard, 
 who was accused of being drunk, had been penalised 
 by the Company officials. Prices had meanwhile been 
 rising steadily for ten years, and were rising still. 
 Wages, which shortly before had been tolerable, were 
 no longer adequate to meet the rise. A long trade 
 boom had been in progress, yet the workers had them- 
 
 * On a ten years' average previous to 191 1 the annual number of 
 strikes was 463, the number of persons afiected 221,058, the number of 
 days lost in aggregate about 4 miUion. In 1912, there were 82 1 strikes, 
 affecting 1,437,032 persons ; and the days lost reached the astounding 
 total of 40,346,400. 
 
 11 
 
152 NEW FALLACIES OF MIDAS 
 
 selves reaped little solid benefit therefrom. Agitators 
 were busy with their fiery exhortations ; let Labour 
 arise like a giant refreshed, and no power on earth 
 could resist its onslaught. There was, in fine, a new 
 spirit abroad in the land ; and it needed only a name 
 and a theory to launch a new crusade. Both name and 
 theory were supplied by Syndicalism. 
 
 Syndicalism came from France, where already in 
 19 1 2 it was a sturdy growth. To be exact, the name 
 " Syndicat " itself signifies no more than the English 
 "Trade Union"; but the sense has been narrowed 
 down and crystalHsed to fit a particular theory. 
 According to this theory, bold and decisive as French 
 theories are wont to be, the Syndicalist holds that 
 nothing matters except business of production, and 
 that nobody counts except the producer. From this 
 it follows that the employer or capitalist does not count 
 at all ; war upon them is a duty war conducted without 
 truce and without honour, until the enemy has been 
 destroyed. Secondly it follows that the consuming 
 public other than the organising producers, does not 
 count ; and therefore the State, or rather the Govern- 
 ment which represents the whole community and 
 defends the interests of every class alike, is equally 
 an obstacle in the Syndicalist's path. Whether it 
 happens to intervene on the worker's behalf or against 
 them, it is an excresence dealing, as they hold, with 
 irrelevant issues and diverting men's attention from 
 the one fundamental problem of life, production. 
 " Men's country," says the Syndicalist, " is their own 
 belly." The State and all that is bound up with its 
 patriotism and nationality and central government 
 must simply cease to exist. From these two doctrines 
 put together the Syndicalist concludes that property 
 must belong neither to individuals nor to the State, 
 but must pass into the hands|of the Producer's Unions. 
 It is a fanciful ideal ; it cannot at any point be pressed 
 
THE RISE OF LABOUR 153 
 
 to a logical conclusion. *' The Mine for the Miners " 
 is a fine sounding motto ; but then comes the fair, 
 though cynical retort, ** the Patients for the Doctor " ; 
 and the thing appears ridiculous. Moreover, how such 
 a reversal of our present social structure is to be 
 accomplished, is not defined. Somehow or other the 
 day will come like a thief in the night ; a general 
 strike, a revolution, who knows what ? And in the 
 meantime in blind but trustful faith, men must fight 
 on preparing ceaselessly, winning here a little, there a 
 little, by strike upon strike, and blow upon blow, 
 pressing the enemy " sans treve et sans reldche." 
 
 Such a theory may suit the intellectual and ardent 
 temper of the French ; but to most Englishmen, as 
 stated in its extreme form, it sounds like idle talk. 
 They have not that faith in abstract ideals which 
 Frenchmen have ; they like to see something for their 
 money, or at least some tangible pledge of definite 
 results. Nevertheless Syndicalism is a name which 
 has caught on. In its saner aspects, at any rate, it 
 seems to promise an alternative to Socialism, and is 
 free from Socialism's most radical defects. The 
 overthrow of Capitalist Society, which would leave the 
 control of industry in the hands of the Trades Unions, 
 and would bring the whole profit of production into the 
 hands of the producers — that seems to many an ideal 
 worth fighting for, and an ideal capable perhaps of 
 none too distant realisation. Already before the war. 
 Syndicalism had taken some hold upon the minds 
 of progressive Unions. But during four years of 
 war its growth has assumed more formidable pro- 
 portions. The strike which in the past had been 
 regarded merely as an attack on the employer, im- 
 mediately became overt menace to the State, which 
 was now directly or indirectly the employer of nine- 
 tenths of the working population. Successive 
 Governments were not strong enough or courageous 
 
154 NEW FALLACIES OF MIDAS 
 
 enough to meet the threats with stern suppression ', and 
 point after point was conceded to the demands of 
 Labour. So Labour finding itself victorious at all 
 points, and that almost without a struggle, began to 
 realise its strength. A spirit of unrest and defiance 
 spread in the storm centres of industry, the cities of 
 Northern England and South Scotland ; vague 
 revolutionary theories which previously had been 
 confined to agitators and rare enthusiasts now became 
 popular catch-words ; and chief among them was the 
 battle cry of Syndicalism ; — the means and sources 
 of production for the producers. Syndicalism is not 
 yet fully fledged ; it has still to develop a definite 
 programme and formulate its policy of action. Never- 
 theless, in its more fanciful exaggerated form, it is a 
 menace to the Capitalist which the Capitalist dare no 
 longer ignore. More than that, it is a menace to the 
 stability of our whole social organism, which since 
 we have seen the unhappy chaos of the Russian 
 Revolution, has assumed a more real and formidable 
 shape. Sooner or later (and perhaps very soon), with 
 it or with Socialism England will have to reckon. Both 
 seem to offer a solution to a situation which cannot 
 be permanent, which is already strained to breaking 
 point, and which at any moment may become in- 
 tolerable. In industrial warfare a temporary truce 
 may be patched up ; some balance of advantage may 
 be struck. But if Labour is resolved upon a fight to a 
 finish, then a fight to a finish there must be. Let us 
 know now what Labour stands for ; what is its 
 concrete policy. If it hopes to win the fight, it is none 
 too early to declare its terms, and to state what use it 
 will make of victory when victory is won. For this is 
 no longer a philosopher's question, no matter of passing 
 academic resolutions or painting imaginary Utopias. 
 Socialism,'^through the centrahsing influence of war's 
 necessities, has already become a part of our political 
 
THE RISE OF LABOUR 155 
 
 structure. Syndicalism is debated in a hundred 
 towns, vaguely perhaps, but none the less in deadly 
 earnest. Whether either or neither will eventually 
 triumph, the future alone will show ; but it is in the 
 present (and that without delay) that the cost of both 
 must be counted. 
 
Chapter XIII 
 
 SOCIALISM 
 
 (i.) 
 Socialism to the comfortable and ignorant is a word 
 
 covering (thought not excusing) a multitude of sins. 
 It is used and misused in a hundred different ways, now 
 for one thing, now for another, but always as signifying 
 something which, if not positively immoral, is at least 
 to be regarded with ridicule or suspicion. At one 
 time, it is a scheme for dividing the world's wealth into 
 an infinite number of equal parts, to be distributed, 
 like bread-tickets, among an infinite number of 
 individuals. At another time it is simply a euphemism 
 for wholesale robbery, whereby the rich man's money 
 is to be handed over to the poor. Sometimes it is 
 used in sorrowful contempt for any man whose sym- 
 pathies are touched by the distresses of the '* lower 
 orders." Even the disciples of Socialism themselves 
 are in no very strict agreement. Communists, Collect- 
 ivists, Comtists, and Revolutionaries, are all gathered 
 under the shelter of its cosmopolitan creed. The very 
 course of the movement is as diverse as the history of 
 religious sects. It pullulates like the monster of a 
 hundred heads ; no sooner is one destroyed by the 
 sharp sword of logic or by the slow strangulation of 
 political events, than two others spring into its place. 
 For, truth to tell, Socialism is not so much a set 
 system, as an enthusiasm and an ideal, and like the 
 ideals of religion, it finds a new formula according to 
 the temper of the age, and the nature of the soil in 
 which it grows. In its widest sense, then, Socialism 
 is simply a belief that all men are brothers and should 
 
 156 
 
SOCIALISM 157 
 
 behave as such. It took just on eighteen hundred 
 years of Christianity, before men thought of asserting 
 this principle in any practical manner ; and when they 
 did, they signalised their access of brotherly zeal by 
 establishing a military despotism and cutting off a 
 large number of their brothers' heads. But though 
 the banner of the Revolution was inscribed with the 
 words Liberty, Equality and Fraternity, and though 
 Rousseau preached the ultimate rightness of pure 
 Democracy, it is to the aftermath of the Revolution 
 rather than to its actual course, that we shall look for 
 any definite scheme of Socialistic practice. With two 
 French writers in particular, Fourier and Saint Simon, 
 the theory began to crystallise. Both were dreamers. 
 Utopians, men of a naive and optimistic philanthropy, 
 In the Gospel according to Fourier salvation was to be 
 found through a new form of political unit. By living 
 together in small groups or communes (counting under 
 two thousand members), men could, he thought, 
 improve their lot, chiefly through a new harmony of 
 organisation which would supplant the wasteful 
 discord of competition. Fourier did not himself 
 propose to suppress all inequality arising from private 
 ownership ; but more thorough-going Communists 
 have not shrunk from asserting that such a society 
 should live as the family lives, each member, that is, 
 giving his work for the good of all, and receiving each 
 according to his need. No doubt it is a beautiful 
 ideal ; but to imagine that under such a system the 
 individual would set a voluntary limit upon his 
 -appetite, requires an almost fanatical belief in the 
 goodness of human nature. And, though, in point of 
 fact, communities much on these lines have actually 
 existed and even flourished in America, their success 
 has only been achieved by the strictest enforcement of 
 discipline, and under the spiritual stimulus of strong 
 religious enthusiasm. 
 
158 NEW FALLACIES OF MIDAS 
 
 Saint-Simon's proposals were more plausible ; and, 
 although in his own day the man himself remained a 
 prophet without honour, yet the school of thought 
 which he founded was long popular in France. Instead 
 of proposing to distribute the wealth of the community 
 according to the individual's own estimate of what 
 he wanted, Saint Simonists declared that each should 
 receive according to the measure of his deserts. 
 Desert was to be judged solely by the function which 
 the man discharged, and all forms of inherited wealth 
 were to be ruthlessly abolished. Saint Simonism, in 
 fact, so far from asserting the complete equality of men, 
 made rather for an aristocracy of merit and is, as 
 will be seen, not far removed from the Collectivist 
 ideal. 
 
 But while these two Frenchmen in the quiet 
 seclusion of their studies were building their quaint 
 castles in the air, there was born a man of different 
 genius and of other race. Karl Marx, the young 
 German Socialist, was a curious mixture of philosopher 
 and prophet ; with a scientific thoroughness and 
 astounding breadth of vision, he took a wide historical 
 view of the State's development, by which he linked up 
 the Socialist future with the Capitalist present ; 
 Socialism, in short, was not for him a subject for vague 
 speculation or philanthropic experiment ; it was an 
 essential and inevitable phase in which the economic 
 evolution of Society must one day culminate. In 
 his master-work. Das Kapital, he showed how the 
 wealth of industrial magnates, gathering as it went, 
 both strength and size like some vast snowball, was 
 destined to crush the working class beneath its weight, 
 how, as the rich became momentarily richer, the poor 
 became proportionately poorer ; and how, one fine 
 day when the position should become intolerable, the 
 masses would arise with one accord and set the world 
 to rights. 
 
SOCIALISM - 159 
 
 Marx's forecast has been demonstrably untrue to 
 fact ; even if the rich have become richer the poor have 
 certainly not become poorer. But (whether his 
 theories are false or true) Marx does not stand or fall 
 a philosopher alone ; for he was also a leader of men. 
 Though he professed to be no revolutionary firebrand, 
 he set himself to awaken the working classes to a 
 consciousness of their plight. Driven out from 
 Germany an exile (for he took part in the Revolution 
 of '48) he carried the message of class warfare to 
 Paris and to London. From here he issued his famous 
 summons to the world, " Workers of all lands, unite ! " 
 and his enthusiasm bore fruit in the foundation of the 
 International Working-men's Association. The" Inter- 
 national " is a league wherein all differences of creed 
 or country are sunk in the common fight against 
 oppression. So, by a curious irony of fate, it was a 
 German who first established the one outward and 
 visible expression of the universal brotherhood of 
 man. This is Marx's chief claim to greatness. His 
 name and theory became words for Socialists to 
 conjure with ; and he gave to Socialistic agitation 
 an impetus and a solidarity which have made it a living 
 force in Europe, and which in our own day has been 
 reborn in the proposal for a Socialist conference at 
 Stockholm. 
 
 It was not, however, till Marx himself died and 
 had been buried in Highgate cemetery, that the fruits 
 of his work began to be plainly visible in England. 
 In the thirties it is true. Chartism had made its protest 
 against industrial tyranny, and had even formulated 
 a remedy in its democratic " Charter." About the 
 same time Robert Owen had thrown out an ideal and 
 had miade experiments in his own Lanark Mills. 
 Then in the early eighties the revelations of Henry 
 George in his " Progress and Poverty " shocked men 
 into action, and set them thinking over his violent 
 
i6o NEW FALLACIES OF MIDAS 
 
 denunciations of Rent as the root of every evil. 
 Soon after Mr. Hyndman and certain disciples of 
 Marx formed in London the Social Democratic 
 Federation. From these a small band broke off 
 calling itself the Socialist League and counting among 
 its members William Morris, who to the consternation 
 of his artistic friends took to attending Socialist Clubs 
 and even addressing crowds at the street corners. 
 Thus the English movement was definitely launched ; 
 its subsequent development has been a curious and 
 characteristic blend of high souled idealism (less 
 visionary than the French) and political agitation 
 (more practical than Marx) . On the one hand, we have 
 had the Fabian Society, seeking by pamphlets and 
 debates to educate the public mind in the science of 
 economic health ; while the Independent Labour 
 Party, with a leg as it were on both stools, strives to 
 uphold in Parliament the pure flame of Socialistic 
 theory. On the other hand, we have the Labour 
 Party proper, an unholy alliance, as some think, between 
 philosophic Socialism and militant Trades Unionism, 
 but an alliance which has at least succeeded in effecting 
 many measures of practical reform. This has not 
 been accomplished without some sacrifice of principle 
 and some contamination with Liberal policies. But 
 indeed. Socialism is so vague and many-sided an ideal 
 that it may well be what you choose to make of it, 
 according as you try to fix your eyes on the head hidden 
 among the clouds or on the feet with which it still 
 keeps touch with material earth. As expounded by 
 the former Leader of the Labour Party, Mr. Ramsay 
 Macdonald, it stands for every blessing, perfection, and 
 privilege which this world has ever known or ever can 
 know. It alone can bring perfect freedom to the 
 individual ; it alone can offer him such a form of 
 private property as shall enable him to a true realisation 
 of himself ; it alone knows how to organise industry, 
 
SOCIALISM i6i 
 
 cultivate genius, encourage art. In a word Socialism 
 is a sort of Paradise come to earth — a state of being 
 fit only for a celestial choir of angels. Now we all 
 want liberty, art, culture and efficiency ; what we do 
 not know is how to get them. The Higher Social- 
 ism may well be matter for pious aspiration ; but 
 it does not help us much in the serious discussion 
 of present-day problems. At one point however 
 Socialism has come forward with a practical suggestion. 
 When at the Norwich Congress Mr. Keir Hardie 
 proposed the nationalisation of " the whole means of 
 production, distribution and exchange" he was in a 
 strict sense talking as a Collectivist, but though this 
 programme would satisfy but one side of the Socialist 
 policy only, it is by so much the most tangible and 
 practical side that it may rightly be regarded as the 
 central plank in the Socialist platform. Here at any 
 rate we are on solid ground. 
 
 (ii.) 
 
 When a man complains of the profit which a mine- 
 owner makes out of his rnine, it is plain that he may 
 have two motives for annoyance. He may be 
 grumbling because he is a miner and his wages are too 
 low; or he niay be grumbling because he is a house- 
 holder and pays too much for coal. Socialism, the 
 all embracing, will sympathise with both grievances ; 
 for it is concerned with the interests of miner and 
 householder alike. Collectivism concerns itself entirely 
 with the latter, with the consumer not with the 
 producer. It purposes to take the mine from 
 the CapitaHst and entrust it to the keeping of the 
 State. The State representing the citizens at large 
 and responsible to the whole community, not to a single 
 class, will study the public convenience, and furnish 
 forth the coal for the consumer's benefit; and no doubt 
 the consumer will benefit handsomely thereby. There 
 
i62 NEW FALLACIES OF MIDAS 
 
 being no longer a mine-owner to take his toll of profit, 
 the State can sell the coal at cost price ; or if it niakes 
 a profit on the business, the surplus can be turned to 
 public advantage some other way. The whole scheme 
 is delightfully simple. There can be no doubt that it 
 would work ; it has already been applied to many 
 branches of production. The Postal service is run by 
 "the State ; so is the Telephone ; and in France some 
 portions of the Railway System. We can see the 
 same principle at work on a small scale elsewhere ; 
 in many towns the municipal authorities own and 
 control the Gasworks, Electric Lighting, Tramways, 
 and even the Milk supply. If we can nationalise 
 the Railways, we can nationalise the Mines ; if the 
 Mines, then the Land also ; and that done, it is an 
 easy and tempting progress to the nationalisation of 
 factories, shops, shipping, theatres, houses, in short 
 everything. The State, emulating the comprehensive 
 efficiency of some great store, will undertake to supply 
 the citizen's every want, from the lease of a country 
 mansion to the purchase of a twopenny toy. Nor will 
 such a State neglect to round the system off by organ- 
 ising the life and habits of its members ; from com- 
 pulsory insurance and compulsory education it will 
 pass to compulsory temperance, compulsory work, 
 and, as like as not, compulsory eugenics. For it is to 
 the State's interest (that is the consumer's) to secure 
 a healthy, industrious, temperate set of workers. 
 Organisation is a passion which grows with habit. 
 Once started the Collectivist State cannot easily draw 
 back ; and it will not leave much to Providence or 
 chance. 
 
 There is not space here to discuss at length the 
 methods by which the State may displace the owners, 
 nor to pass judgment upon the ethics of expropriation. 
 First, there is the open method. It may take all at 
 a blow by forthright confiscation ; or filch them by 
 
SOCIALISM 163 
 
 the more insidious but equally obvious process of 
 oppressive taxes. In either case it will take its stand 
 upon the plea of the common good. That is the excuse 
 which served to recommend the confiscation of the 
 monasteries, and the disendowment of the Welsh 
 Established Church. The State, SociaHsts say, is 
 greater than the Individual, who owes everything he 
 has to the state's bounty and protection. Therefore, 
 say the Socialists, the State can do what it wills with 
 its own. They will argue, for instance, that the high 
 value of your land in Hampstead is derived from the 
 presence of the people who rent it, and that therefore — 
 a very singular contention — the People with a large P 
 are entitled to annex your profits, because it is they 
 have caused it and not you. It is on this somewhat 
 dubious pretext that many are eager to-day to tax the 
 landowner out of existence — but this is a flimsy 
 subterfuge for evading moral issues. Such a plea is no 
 better than the Spartan's who was wont to justify 
 picking and stealing because he had previously invented 
 an hypothesis that private property should not exist. 
 But the state itself happens to depend upon a directly 
 contrary hypothesis ; namely, that individuals are 
 bound to respect their neighbour's rights ; and the state 
 if it defies the moral law itself, will be cutting the 
 ground from under its own feet. So in all likelihood it 
 will prefer to adopt a show of legality and buy the 
 private owners out. This is the scheme which now 
 finds favour with the majority of modern Socialists. 
 For precedent they are able to quote such a tran- 
 saction as the buying out by Government of the Private 
 Telephone Companies in 1907 : and that the scheme 
 would in its initial stages be workable enough, we 
 need not doubt. The first step would be to find the 
 money for the purchase. So large a sum could hardly 
 be raised by ordinary taxation, but a public loan could 
 easily be issued : and this would be done. As, how- 
 
i64 NEW FALLACIES OF MIDAS 
 
 ever it is probable that the old proprietors, with the 
 purchase money in their hands, would largely invest 
 it in this loan, the net result would be that they would 
 have exchanged their old holdings for Government 
 stock ; and that instead of their large and perhaps 
 precarious profits, they would now exact, as creditors 
 of the nation, a fixed return of interest from the State. 
 The second step would therefore be to relieve the 
 exchequer of this incubus : a sinking fund would be 
 formed out of annual revenue, whereby the loan might 
 be paid off. So far, so good. This plan also would 
 work smoothly enough at first : so long as the capitalist 
 could find fresh uses for the money so refunded to him, 
 he would have no just cause for complaint. But, if the 
 State were able (a contingency we well may doubt) 
 to extend this legitimate method of expropriation to 
 all forms of property, then the game \vould be up, for 
 in that case it must come to confiscation in the end. 
 The private owner may be willing for a time to accept 
 whatever price the State may offer, but only so long 
 as he can find means to dispose of his capital elsewhere. 
 Once he sees every channel of investment threatened, 
 it will be futile to accept banknotes which he can turn 
 to no new purpose. For though the sum which the 
 state pays him money down, might well keep him in 
 clover for his Hfe-time, he will not be able to trade with 
 it. Not only will he have lost his peculiar privilege 
 of " profiteering," but he will not be able to increase his 
 capital nor to bequeath any permanent subsistence to 
 his children ; Capitalists, seeing the sources of their 
 gains in jeopardy, will raise an outcry like the silver- 
 smiths of Ephesus ; and will oppose the further pro- 
 gress of reform with all their power. Voluntary sale 
 will cease ; and their goods must needs be taken from 
 them by force, as though from criminals. It is 
 arguable, I suppose, that it is a crime against Society 
 to be rich. At any rate it is easy -for the SociaHst to 
 
SOCIALISM 165 
 
 say that Capitalists have done nothing to deserve 
 their fortune. But it is hardly consistent to stop 
 there ; if Capitalists' brains are not deserving of 
 reward, Socialists' brains are no more so. At this 
 rate, there can be no reason under heaven why the 
 Socialist State should distinguish between the services 
 of its citizens, nor why it should pay its Prime Minister 
 more highly than its sweeps. Let us forthwith 
 institute the commune and have done with this talk 
 of deserts and rewards ; under that delightful system, 
 everybody would presumably be happy, free to do 
 what he likes, and to get what he wants, and there could 
 be no reason thenceforward to grudge a neighbour 
 any mortal thing — except his appetite. 
 
 It is usually considered bad ethics, to condone the 
 immoral means in anticipation of the moral end. Yet 
 we cannot ignore that in the larger movements of 
 history this obnoxious principle has stood justified 
 by its results. The overthrow of tyrants, and 
 oligarchies, the emancipation of oppressed peoples, 
 even the beneficent supremacy of great empires, 
 these have not been accomplished without worse things 
 than robbery. If Socialisni can make good one half 
 of the beautiful things that it promises, we might well 
 be glad to draw a veil over its less lovely features. 
 It is indeed an alluring picture, this state of co-opera- 
 tion and brotherly love. It has much to offer besides 
 the abolition of Capitalists. At one stroke we should be 
 rid not merely of profiteering, but of the competition 
 itself and all its attendant curses, the whole meaning- 
 less struggle to outbid or undersell, the wasteful, ugly 
 habit of advertisement, the frauds, and duplicity of 
 commerce ; and above all we should be rid of the 
 unnecessary duplication of single functions. All this 
 would disappear under the directions of a wise and 
 centralised control. We should no longer have 
 " twenty milk-carts rattling down the street where one 
 
i66 NEW FALLACIES OF MIDAS 
 
 would do." Railway companies would not run their 
 trains to miss a rival company's connections ; nor 
 would traders waste their energies to encompass the 
 ruin of another firm. Already in the operation of the 
 great trusts we can see something of the economy 
 which unity of organisation could eSect both in effort 
 and expense. 
 
 But Socialism stands for much more than a good 
 business proposition. Far more than mechanical 
 efficiency, it counts upon a spiritual change. For 
 co-operation brings out all that is best in man ; set 
 free from the demoralising pursuit of personal 
 aggrandisement he would be uplifted by the conscious 
 effort to serve the common good. Altruism and honest 
 emulation would supplant the old jealousies ; and 
 where no bar of class or privilege survived, each would 
 find a field open to his talents and a new happiness of 
 self-realisation. It is not for nothing that many have 
 seen in Socialism the true goal of Christianity. 
 
 Now we cannot pry into the future ; shown such a 
 picture of posterity we cannot point to this or that 
 and say for certain " It will " or " it will not be so." 
 Nevertheless taking human nature for what it is, we 
 may safely cast a doubt on some details of the picture. 
 For you may set the whole social fabric topsy-turvey, 
 but man himself will not quickly change. He will still 
 have appetites ; he will still be found discontented with 
 what he has and eager to get more. Therefore, since 
 the socialistic state must still reward the services of 
 its members, must still, that is, pay wages, unregenerate 
 man will do his best to get the most he can out of the 
 State. At first perhaps he will present his demands 
 to the authorities, confident of receiving their 
 indulgent sympathy. He will be rudely shocked. 
 For the authorities, intent upon keeping prices low in 
 the consumer's interest, v/ill summarily dismiss his 
 claims. So, faute de mieux, he must fall back on 
 
SOCIALISM 167 
 
 his old methods and organise the strike. But here 
 again he will be met and countered ; the public will 
 stand no tampering with its supplies ; the government 
 will be called upon to take strong measures, and the 
 workman will be ordered back to work, censured for 
 conspiracy against the common weal, and, if need be, 
 penalised for his insubordination. The servant of the 
 State cannot strike with any prospect of success ; for 
 the State is a mightier master than any capitalist 3^et 
 born. This M. Briand proved when the railway men 
 of France went on strike in recent years; he ordered a 
 mobilisation of the army, commandeered their services 
 as conscripts under military law ; they dared not 
 disobey under penalty of court-martial and the strike 
 was broken. So too in the Belgian strike of 1902; in 
 this case the bourgeois mobilised their civil forces, ran 
 the necessary services of the community themselves, 
 and showed the producers that their threat could be 
 parried by the united efforts of the consumers. Far 
 more powerful would be the control of a Socialist 
 Government, with the whole force of law and consti- 
 tution at its back. It may be of course that the State 
 will be a more reasonable master than the employers 
 were, and that the demands of the workers will in 
 every case be granted (though that has not been the 
 experience of public servants in the past, and even in 
 our own Post Office there have been threats of strike), 
 but that will avail nothing unless the demands of the 
 workers are reasonable too ; and what ground have 
 we for assuming that they will be. Men will never 
 be satisfied on this side of Doomsday ; and it is far 
 more probable that failing by this method, they will 
 turn to another more effective and more insidious. 
 Although they will have lost their power of industrial 
 independence, ' at least they will not have lost their 
 voter's privilege. As constituents, they can still bring 
 pressure to bear upon their members and through them 
 
 12 
 
i68 NEW FALLACIES OF MIDAS 
 
 upon the Government. In our own day such a thing 
 is not unknown. In the Government dockyards 
 workmen and groups of workmen have certainly had 
 recourse to political jobbery in order to advance their 
 interests. Under the Socialist state where every man 
 and woman would be a public servant, the danger 
 would be increased a thousand-fold. The largest group 
 of industrials, were their claim to a hearing great or 
 small, would hold a weapon of tremendous power over 
 the heads of unwilling ministers. In the constitu- 
 encies, seats would go to the man who bid highest 
 in promises of support to local industries ; Parliament 
 if not openly corrupted, would become the platform 
 of industrial strife. Political jobbery and wire pulling 
 would outdo the evils of industrial competition. 
 Larger issues would be lost to sight, as already some of 
 the younger states of the world, where Labour govern- 
 ments are in control, have learnt to their bitter cost. 
 
 That is one danger, which threatens Socialism's 
 success ; but there is another to follow. When the 
 direction of industry is taken out of the hands of 
 private persons, it must be put into the hands of 
 Government ofhcials. Now Government offices may 
 not be as black as they are sometimes painted. But 
 it is clear enough that where not only every clerk, but 
 even every head of a department is responsible to 
 somebody above him, enterprise will be at a discount. 
 The official cannot act without leave or upon his own 
 initiative. Before he can travel forth along some 
 new path, he must have his passport vised. Checks 
 and counter checks innumerable will be devised to 
 regulate his actions ; rules and red tape bind him hand 
 and foot, so that little by little he falls into a habit of 
 routine and fulfils his duty by the filling up of forms. 
 Fear of public displeasure too will daunt him in every 
 project. The fatal error of the official is to be caught 
 blundering. 'He has Httle to gain and everything to 
 
SOCIALISM 169 
 
 lose by taking risks. His strength like the strength of 
 Egypt of old is to sit still. This tendency towards the 
 stagnation of oihcialdom is strong ; but fortunately 
 it is not inevitable. We ourselves happen to be living 
 in a progressive age ; we have go-ahead ministers ; 
 the Government Departments have put their shoulders 
 boldly to the wheel ; and they will have much to show 
 for their exertions. In Education, Labour control, 
 Public Health, and what not, we shall likely enough see 
 wide and beneficent reforms ; for centralisation creates 
 a motive power which private enterprise cannot 
 command, just as one man at the helm can steer the 
 ship more skilfully than the ill correlated efforts of a 
 hundred oarsmen. So there can be little doubt that 
 the state of the future will gather more and more 
 threads into its own hands. Its ministers will wield a 
 tremendous power for good, and so long as their 
 enthusiasm is sustained and the crusading spirit is 
 upon them, they will effect changes which, under the old 
 system of laisser faire, we waited for in vain. But 
 none the less behind the knight errant of state control, 
 there sits the spectre of bureaucracy. As the field of 
 action becomes wider and the touch of personal 
 inspiration less vital and direct, then comes the chance 
 for paralysis and stagnation to return. State manage- 
 ment is by no means a sure passport to efficiency. 
 In France the Chemin-de-fer de I'Oueste has been notori- 
 ously ill run ; and municipal undertakings are not as a 
 rule more successful than those managed by private 
 enterprise. Trade conducted as one gigantic national 
 concern would be a perilous adventure ; and no pro- 
 phecy can guarantee that the sources of enterprise and 
 invention would not be sapped, — not altogether because 
 SociaHst man would lack the old stimulus of private 
 property. It is clear, the SociaHst would say, that 
 already the vast majority of mankind do labour 
 without the smallest prospect of owning anything. 
 
170 NEW FALLACIES OF MIDAS 
 
 As the supreme direction of commerce and production 
 passes more and more into the hands of the few, the 
 number of those who make direct profit out of their 
 exertions is immeasurably diminished. Yet for all 
 that bank directors, factory foremen, industrial 
 managers, working for a fixed salary, are not less 
 industrious than the shopkeeper or the independent 
 trader whose incomes depend solely upon the success 
 of their own exertions. Even waiters can be attentive 
 without the expectation of a tip. Under Socialism, 
 moreover, invention and enterprise might easily be 
 encouraged by a suitable system of rewards ; and if the 
 collectivist ideal were not too rigidly maintained, some 
 scheme of profit sharing would not be difficult to 
 introduce. But, apart from these incentives to good 
 work, a high standard of industry must depend most of 
 all upon a widespread sense of duty. That motive 
 must supplant the lower motive of private gain ; 
 without it Socialism is bound to fail. And indeed, if 
 stagnation is to be avoided, it can be done upon one 
 condition only — that the people as a whole, not merely 
 its higher officials, preserve their vigour and manly 
 independence. Countries get, as it is said, the Govern- 
 ment that they deserve ; and the higher control will 
 remain progressive, only if the nation itself remains 
 alert, vigorous and ambitious — alert in the choice of 
 its representatives, the control of their policy ; vigorous 
 that it may infuse fresh blood into their ranks ; 
 ambitious always to strike out fresh lines of action, and 
 to improve upon their best. Now under the Socialist 
 order of things, every man, woman and child will be 
 a servant or dependant of the State. They will not 
 all wear brass buttons and peaked caps ; but none the 
 less they will look to the State as master and lean upon 
 it for support. Not merely will the great captains of 
 industry and trade have passed away ; but the personal 
 independence of the middle class, the small shop- 
 
SOCIALISM 171 
 
 keeper, the yeoman farmer, the professional man will 
 have vanished with them. Those many millions, too, 
 whose life is even now a life of dependency and service, 
 will become more dependent and not less. To-day the 
 men exercise some freedom at least in the choice of 
 the trade they shall follow, the master they shall serve, 
 and the age at which they shall retire. But, once 
 caught in the vast organisation of a State intent upon 
 turning its human material to the best advantage, they 
 will find themselves mere ciphers in the hands of others. 
 Marked out at school for the trade or profession to 
 which their capacity best suits them, they will be 
 drafted out by the centralised bureaux of employment, 
 and set into their appointed place. The term of their 
 working days will be fixed by a system of pensions and 
 superannuation such as is now current in our civil 
 services. I do not say that their lives will be less 
 useful or less happy for all this ; but it is certain that 
 their spirit cannot retain its old independence ; their 
 individuality must suffer. Character is not to be 
 manufactured by methods of compulsion. A man 
 learns most and best not what he is made to do, but 
 what he does of his free choice, from his blunders 
 as well as from his successes. Take away his liberty, 
 and he will never gain self-control. Deprive him of 
 money and he will never learn to be honest ; forbid him 
 to touch drink and he will never acquire the habit of 
 true temperance. Wine, as the Spartans used to say, 
 is the best schoolmaster. So v^ith the strong wine of 
 economic liberty. 
 
 And this is what the Socialist, in his hurry to reform 
 mankind, too frequently forgets. Consider Lloyd 
 George's Insurance Act and its effect upon the people. 
 So long as membership to a Friendly Society was 
 optional to a man, he was free to pay a subscription or 
 not as he chose. Now he has no such choice ; but 
 though we have forced him to save, we have not 
 
172 NEW FALLACIES OF MIDAS 
 
 taught him thrift ; for virtue is something more than 
 the negative of vice. Or consider the case of com- 
 pulsory education with its attendant schemes for 
 public meals for the children. Excellent as these are, 
 there can be no doubt that the parents lose the sense 
 of their personal responsibility for the child. They 
 tend to regard the child's upbringing as mainly the 
 school- master's business and are ready to wash their 
 hands of the nuisance. There is no question here 
 concerning the benefit of these two measures ; but 
 however beneficial and however necessary compulsion 
 may be, it none the less has its dangerous side. 
 It is true that by removing the weight of certain 
 responsibilities from the individual's shoulders, the 
 State can set him free for better and higher activities. 
 By securing his health, his proper education, it enables 
 him to lead a better and more useful life in other ways. 
 That is a fair defence for compulsion ; but there must 
 be a limit to the argument ; for as the Socialistic State, 
 eager to see all its members behaving as they should, 
 encroaches more and more upon the various sides of the 
 individual's life, it must by that very process turn him 
 more and more into a machine, and once his sense of 
 responsibility is gone, his power of initiative must 
 surely follow. 
 
 It is the common error of reformers to imagine that 
 the shortest road is always the best way home ; and 
 the Socialist has forgotten that it is the seed which 
 matures most slowly, that yields the richest harvest. 
 His state would, it is clear, bear early and abundant 
 fruit. Its efficiency would be beyond question ; but 
 even efficiency may prove rotten at the core. The 
 German people have organised their country's wealth 
 both human and material with unparallelled efficiency ; 
 yet throughout the war the greater faculty of initiative, 
 invention and resource has not been upon the German 
 side. It may well be doubted whether in the long run 
 
SOCIALISM 173 
 
 they would even have out-stripped their rivals in the 
 field of trade and manufactures. But even had they 
 done so, such a victory would have been purchased at 
 too great a cost. There are things in life of higher 
 value than material prosperity ; and the man or 
 nation that sets success before conscience, and effi- 
 ciency above character, is signing the fatal compact of 
 Faustus. 
 
 Socialism may fairly claim that by its democratic 
 institutions it would avoid the grosser errors of the 
 Germans ; but just because it could never be content 
 to leave the individual to himself that he might learn 
 by his blunders and misfortunes the very lessons which 
 life is meant to teach him, it is certain that Socialism 
 could never raise him to the level to which he is meant 
 to rise. The spirit of service and self-sacrifice which 
 Socialism upholds, is a fine and noble ideal ; but the 
 service and the sacrifice must come from within a 
 man's own self. For no political system can make 
 human beings good or happy ; that they can only 
 accomplish for themselves ; and before they can 
 accomplish it, they must have been educated to the 
 part, learning in the hard school of experience, and 
 exercising their own liberty of choice. And on the day 
 when the lesson shall have been learnt, there will be no 
 need for Socialism any more ; the millenium will have 
 arrived. 
 
 NOTE ON CO-OPERATIVE SOCIETIES OF 
 CONSUMERS. 
 
 It would not be right to close this chapter without 
 making some reference to the great practical experi- 
 ment in Socialistic methods which has been conducted 
 by the Co-operative Societies of Consumers. Though 
 due to the private enterprise of individuals, and being 
 
174 NEW FALLACIES OF MIDAS 
 
 therefore in no sense a preliminary instalraent of 
 State Socialism, this organisation is nevertheless 
 in essence Socialistic and not Syndicalist : for, as its 
 name implies, it is designed first and foremost to 
 promote the interest of the consumer rather than the 
 producer : and for this reason it is to be distinguished 
 from the parallel movement known as co-operation of 
 producers, with which it is frequently coupled. 
 
 The method of these Societies will perhaps be best 
 understood by looking back to their prototype and 
 model, the Society of the Rochdale Co-operators, which 
 not only gave the earliest impulse to the movement, but 
 also laid down in its main outline the policy that has 
 been followed ever since. In the year 1844, twenty- 
 eight Rochdale weavers clubbed together to form a 
 Co-operative Store. Each saved the modest sum of 
 twenty shillings and upon this tiny capital the store 
 was opened. The advantage at which the weavers 
 aimed was nothing less than the elimination of the 
 professional retailer and the diversion of the pro- 
 fessional retailer's profits into the pockets of the 
 members. Goods were bought, and were sold to 
 members across the counter (one of the v/eavers himself 
 acting as salesman in the first instance) not at cost 
 price, but at the rates then prevailing in the neigh- 
 bourhood. The surplus profits of the business were 
 then reckoned up and at fixed intervals distributed 
 among the members each receiving in proportion to the 
 purchases that he had made. This important and novel 
 principle proved then and has proved ever since so 
 effective a means of inducing members to do a maxi- 
 mum amount of business at the store, that it has been 
 generally adopted by the numerous Societies which 
 have followed the lead of the Rochdale pioneers. 
 For the idea took strong hold on the working classes. 
 By 1904, there were nearly fifteen hundred societies in 
 existence. Over two million members were subscribing 
 
SOCIALISM 175 
 
 their savings to the capitalisation of these concerns, 
 the working funds of which then ran to thirty millions, 
 the annual turn-over to sixty million pounds. The 
 movement is growing still : and in the first decade 
 of this century alone, the membership increased by 
 one half. It draws its adherents chiefly from among 
 the better paid workers : for the very poor have no 
 money to invest ; the rich prefer other channels for 
 investment. Its activities which were at first con- 
 fined to the retail trade only, have gradually been 
 enlarged. The first step was a very natural extension 
 to the wholesale trade. To this the Societies were in 
 a manner forced, partly because the various stores 
 were found to be buying against one another in the 
 wholesale market, partly because the independent 
 retailers, jealous of their too successful rivals, were 
 trying to press the wholesale merchants to a boycott. 
 The upshot was that in 1864, the Co-operative Whole- 
 sale Society was founded : to be followed a few years 
 later by the establishment of a similar society in 
 Scotland. But this step soon led to another. Inde- 
 pendent as they now might be of the wholesale 
 merchant, the societies were still at the mercy of the 
 manufacturer, and, gradually, they awoke to the 
 obvious advantages of manufacturing for themselves. 
 Production was not indeed a complete novelty in th'^ 
 history of the movement : and in quite early days we 
 find the Co-operatives in possession of a flour-mill. 
 But once it was undertaken in real earnest, their 
 productive enterprise grew apace. Fruit farms, 
 dairies, coal-mines, and even tropical plantations 
 were acquired. Factories were started for the manu- 
 facture of clothing, boots, soap, saddlery, and 
 furniture. Not even transport was neglected, and in 
 due course a line of co-operative steamers began to ply 
 between English and continental ports. In short, 
 the whole process of production, from mine or field 
 
176 NEW FALLACIES OF MIDAS 
 
 right up to the store counter has been brought step by 
 step within the scope of co-operative enterprise. 
 
 In many cases, it is true, actual achievement has 
 been small : and some have even written down 
 co-operative production as a failure : but at least it 
 points the way towards greater things. It has proved 
 that the working-class consumer can, by combination, 
 dispense with the services of the capitalist and organise 
 for himself the supply of his own chief wants. A 
 movement so prosperous and ambitious cannot stand 
 still : it is already a power in the land to which the 
 passage of each year brings fresh addition of strength. 
 Recentty it has entered the field of politics : its can- 
 didates are preparing to stand at the next parliamentary 
 election : and its alliance with the Labour Party itself 
 gives a clear indication of its future policy. But, 
 wonderful progress as the movement has now made 
 in the seventy years of its life, we can scarcely gauge 
 its true potentialities except by examining more 
 closely its natural scope-jgind limitations — and to these 
 we must now pass. 
 
 First, then, of its achievement. To the working 
 class consumer threatened by the tyranny of the 
 capitalist profiteer, co-operation has proved a veritable 
 bulwark of defence. By offering a strong incentive to 
 economy and by opening an easy channel for invest- 
 ment, it has given him the opportunity (hitherto but 
 rare) of controlling in part at least the apparatus of 
 production and supply. But it does more than this : 
 to combat the forces of Capitalism without, would be 
 small gain if the self-same forces were allowed to gain 
 a foothold within the societies themselves. This 
 however the very form of their constitution effectually 
 prevents. When every member is on a footing of 
 equality, when one pound invested in the Society's 
 funds carries the same authority as a thousand, where 
 '* one shareholder, one vote " is the democratic prin- 
 
SOCIALISM 177 
 
 ciple of co-operative control, it is clear that no single 
 shareholder can gain a predominant position over his 
 fellows. There can be no magnates of co-operative 
 finance. Thus there would seem to be a real truth in 
 the societies' claim that they have exorcised within 
 themselves the hated spirit of commercialism. Com- 
 petition between member and member, or between 
 store and store becomes altogether meaningless, when 
 " profits " are distributed, not in proportion to each 
 member's capital, but in proportion to the purchases 
 that each member makes.* Best of all, this beneficent 
 change has been accomplished, not (as under socialism) 
 by a universal system of compulsion, but by the 
 spontaneous act of individual men and women. The 
 Co-operative Movement works through no paternal 
 discipline of State : rather it is of itself a liberal 
 education in economic freedom, an opportunity for the 
 personal exercise of economic wisdom, and a stimulus 
 to the virtues of independence and self-help. 
 ' .0 Yet against this special excellence of the co-operative 
 scheme must be set its one fundamental weakness. 
 For, while, like Socialism, it sets out to solve the great 
 economic problem of the day, it cannot, like Socialism, 
 pretend to offer a complete solution, simply because it 
 can never hope to cover the whole field of economic 
 life. That problem it approaches, as we have seen, 
 from one side only, the side of the working-class 
 consumer. His conscious and immediate wants it 
 attempts to satisfy and may succeed in satisfying : 
 but with production other than that which satisfies 
 those needs, it is not interested. When, hovv?ever, we 
 come to consider our own national industries, it will 
 at once be seen that they are by no means confined to 
 this narrow field. Our workshops and factories are 
 engaged in turning out cantilever bridges and trans- 
 
 * Invested capital receives, it is true, a regular dividend ; but this 
 at no more than a standard rate of four or five per cent. 
 
178 NEW FALLACIES OF MIDAS 
 
 atlantic liners as well as handkerchiefs and tea-pots. 
 An enormous quantity of our out-put is destined for 
 exportation : much of it consists of articles which are 
 of no use whatever to the poor. Co-operative societies 
 could not well undertake to supply the Admiralty with 
 coal : they could hardly engage upon a contract for 
 building a railway in Peru. Hence it seems clear 
 that they can never capture many of our largest and 
 most prosperous industries. Let us admit that one 
 day the class from which their members are drawn 
 may to a large extent become economically self-con- 
 tained : that is to say, the large number of the popu- 
 lation may stand, as it were, apart producing by them- 
 selves and for themselves the chief necessities of life, 
 consuming the products of co-operative farms, wearing 
 clothes woven on co-operative looms, and using articles 
 of furniture produced in co-operative shops. But 
 there the natural function of the Societies must cease. 
 They cannot oust the private capitalist from his control 
 of other industries. Working side by side with him, 
 and often in competition with him, they may indeed 
 hold their own and serve their appointed end : but 
 the main economic fabric of society will not be radically 
 changed, because a part of it is organised on a popular 
 basis and pays dividends in a peculiar fashion. The 
 societies will remain, as Lord Rosebery said of them, a 
 State within the State, a co-operative island in a 
 Capitalist sea.* 
 
 Before, however, even such limited success can be 
 attained, the problems and difhculties which must be- 
 faced and overcome are numerous enough. Two in parti- 
 cular seem to call for mention here : and both concern 
 co-operation upon its productive side. The first has 
 
 * In the report of the Fabian Research Committee it is estimated that, 
 given the widest possible extension of co-operative business, it might 
 eventually cover one-fifth but no more than one-fifth of the total 
 national production. 
 
SOCIALISM 179 
 
 to do with its relation to the rival agents of production ; 
 for with these, until they have established a monopoly, 
 the societies must in very self-defence compete. 
 Now as, we have seen, they are not primarily money- 
 making concerns : and for this reason they lack the 
 incentive which stimulates the energy and imagination 
 of the private capitalist or trader. He, for his part, 
 is ever on the alert to find a new market for his goods, 
 and to adapt his production to some change of taste 
 and fashion. In other words, he tries to create 
 demand ; the co-operatives follow it. His object is 
 to discover fresh needs : theirs to supply the needs they 
 see. Hence co-operative production is apt to be too 
 cautious and conservative. The very security of its 
 market is a discouragement to bold initiative : and 
 so there is a real danger that co-operative industry will 
 lag behind, content to employ old-fashioned easy- 
 going methods, and to supply goods inferior in quality 
 to the goods of its capitalist rivals. If that prove 
 to be the case, success will be long in coming : perhaps 
 will never come at all, and the first problem therefore 
 is briefly this : can the standard of co-operative 
 production be kept high, and at the same time the 
 standard of co-operative ideals not be lowered, or 
 must the bare fact of external competition involve some 
 concession to the spirit of commercialism ? 
 
 The second problem springs in part from the first : 
 for closely connected with their relation to competitors 
 is the Societies' relation to their own employees. 
 Amongst the many methods whereby the private 
 capitahst is enabled to over-reach or outstrip his 
 rivals, not the least fruitful is the employment of 
 cheap labour : and it is clear that if by paying low 
 wages he can produce his goods at a lower price than 
 the co-operatives, they will once again be placed in a 
 dilemma. They can hardly hope to extend their 
 market, so long as their goods are dear in comparison 
 
i8o NEW FALLACIES OF MIDAS 
 
 with his : yet the democratic principles for which they 
 stand forbid that they should offer to others a wage 
 which would not satisfy themselves. This problem is 
 one which admits of no evasion : for with the increasing 
 growth of co-operative production it is likely to become 
 more acute, not less. Hitherto, it is true, the difficulty 
 has been tided over. Employing though they do some 
 hundred thousand hands, the Societies have never- 
 theless been able to give them generous treatment ; 
 and the wages they offer compare favourably with the 
 wages paid by their capitalist rivals. On the other 
 hand we must remember that the great majority of 
 their employees are women and girls, who have as yet 
 developed no strong organisation of defence nor 
 corporate feeling of injustice : and we may be sure 
 that as the industrial enterprise of the societies expands, 
 it will less easy for them to satisfy the claims of their 
 employees than it has been in the past. At a time 
 when the workers are demanding a larger and larger 
 share in the profits of production, it is unlikely that 
 they will make any exception in the co-operatives' 
 favour. If their demand on capital is just, it matters 
 little to whom that capital belongs : and whatever 
 is extorted from the private capitalist, will be required 
 of co-operative capital also. 
 
 This question is, of course, no new one and it has 
 long exercised the minds of the co-operatives them- 
 selves. Their former coolness towards the Trades 
 Unions arose mainly from this cause. They have even 
 experienced strikes and labour troubles in their own 
 factories and shops : and even with the Trades Unions 
 as their allies the question can hardly as yet be con- 
 sidered closed. Various expedients have been devised 
 to meet it. The plan of admitting the employees to 
 some share of the control has been considered only to 
 be rejected. The Scottish societies have tried to solve 
 the difficulty by admitting them to a participation of 
 
SOCIALISM i8i 
 
 the profits. But such a concession is not merely at 
 variance with the co-operative view of profits, but is 
 also open to just the same objections as when it is 
 made by the capitalist employer. The fact is that so 
 far from solving the problem of industrial profits, 
 Co-operation has merely carried it one step further 
 back. When the issue ceases to lie between master 
 and man, it is revived again between producer and 
 consumer. Between the interests of these two, there 
 must be conflict, so long as there is also division of 
 labour or a system of exchange. It is the fundamental 
 antagonism of economic life : and reconciliation can 
 come in two ways and two ways only. One is by the 
 adoption of State Socialism, that is, by force. The 
 other is by a voluntary and universal recognition of 
 the economic brotherhood of man. 
 
 Now it is for the latter ideal that Co-operation above 
 all stands : and in its loyalty thereto must lie its 
 ultimate chances of success. For while it can never 
 hope to conquer capitalism by capitalist methods, it 
 may yet win the world by converting it. The two 
 problems of which we have spoken, will be solved, if 
 they are to be solved at all, by maintaining co-operative 
 idealism, not by debasing it. The solution of the first 
 must come by offering the best possible value to the 
 purchaser of goods ; the solution of the second by 
 offering the fairest possible wage to the employee. 
 In preferring fair prices before large profits, in setting 
 commercial honesty above the capture of markets, in 
 upholding standards of good workmanship, and in 
 rejecting all that is shoddy and unsound, the 
 Co-operative societies may set a pattern to the world ; 
 and notwithstanding that progress may be slow, it 
 will none the less be sure : for such methods bring their 
 own reward. So too, by resolutely insisting on an 
 equitable wage-scale, without undue regard for profits 
 on the one hand, or undue leniency to the workers on 
 
i82 NEW FALLACIES OF MIDAS 
 
 the other, they may do much to settle the old quarrel 
 between employers and employed. For they will 
 teach a practical lesson to both parties : it will become 
 clear to the employer that what the Co-operatives can 
 afford to pay, must also be possible for him : and from 
 the Co-operatives' experience the employed will learn 
 what wages are possible and what are not. Finally 
 and above all, there is much virtue even in a name. 
 So long as competition was the catchword of the day, 
 it is little wonder that men even thought it a duty to 
 outbid or undersell a rival. But once the idea is 
 spread abroad, that co-operation can succeed where 
 competition has failed, then surely we may hope to 
 see the jealousies, suspicions and injustices of the past 
 yield place to a new and generous spirit of good fellow- 
 fellowship and trust. 
 
Chapter XIV 
 FALSE SOCIALISM OR THE SERVILE STATE 
 
 (i.) 
 
 It is the one great merit of the Socialistic method that 
 it is constitutional. For though its end is revolu- 
 tionary, the means to that end are not. Socialism 
 does not run counter to the principles of democracy ; 
 it does not seek to flout the supreme authority of the 
 State but rather to reinforce it. Its battles will be 
 fought out, not at the barricades, but across the benches 
 of the House of Commons. In other words, socialism 
 could only be established by the express will of the 
 people and through the votes of its elected leaders. 
 Yet just because the socialist movement is a political 
 movement, pursuing its aims through constitutional 
 courses, it is for this very reason exposed to a peculiar 
 danger. Democracy is a sea of shifting tides and many 
 incalculable currents, and the strong flow of the people's 
 will may often be stemmed, or, if not stemmed, diverted 
 into unexpected channels. Parliament's policy is 
 influenced by much else besides the ballot-box. All 
 manner of interests are reflected in its changing counsels 
 and of these interests Labour is by no means the 
 strongest or most united ; still less is it the most skilful 
 or experienced in the game of political tactics. So the 
 very methods by which Labour feels its way towards the 
 socialistic system, may be used by others to thwart 
 its purpose and render its seeming victories innocuous. 
 If, as we often boast, England is in truth a democratic 
 country, there was never surely a democracy in which 
 
 iS3 18 
 
i84 NEW FALLACIES OF MIDAS 
 
 the authority of wealth and privilege were allowed to 
 survive so long, so openly or so effectually. After two 
 Reform Bills, the introduction of the secret ballot, and 
 the diminished power of the House of Peers, the country 
 has continued to accept the rule of a '' governing 
 class." Two thirds at least of its parliamentary 
 representatives are still drawn from the ranks of the 
 gentry, men bred in the traditions and prejudices of 
 their station, and educated in those twin strongholds 
 of aristocratic privilege, the Universities and the 
 Public Schools. In the atmosphere of a House thus 
 constituted, the Labour Party has struggled almost in 
 vain to keep its head clear ; and in the course of time 
 has become half assimilated to it. Some of its members 
 rose indeed to ofhce ; but even men like John Burns, 
 seemed susceptible to the influences of departmental 
 tradition ; and before long, many declared that he had 
 turned Tory in his old age. So it may fairly be said 
 that before the war no authentic spokesman of the 
 people had as yet attained to a predominant political 
 position. Meanwhile, wealth had rapidly been gaining 
 an even stronger purchase upon the reins of power. 
 How deep or how far reaching was its influence, only 
 the politicians could tell. But the strength of vested 
 interests was frequently sufficient to defeat reform ; 
 and it was the common complaint of Labour that when 
 Government intervened upon industrial disputes, it 
 too often ranged itself openly upon the side of the 
 employer. The advent of the war bringing as it did 
 vast increase of wealth to those who were already rich, 
 making them, through the medium of repeated loans 
 the giant creditors of the nation, and serving at the 
 same time to break up the organised strength of 
 the Trades' Unions and to compel the suspension of 
 industrial strife — the war, I say, though it has also at 
 the same time let loose the flood of revolutionary 
 passions, cannot but have added to the power of 
 
THE SERVILE STATE 185 
 
 wealth. With the coming of peace, the capitalist 
 will be found doubly armed against his adversary the 
 working-man. Not only can he fight him — as well 
 perhaps as ever — upon the old industrial battle-ground ; 
 but like a skilful strategist he may strike in another 
 quarter, and while yet the ranks of Labour are dis- 
 integrated and the reorganisation of industry is taking 
 place, he may mobilise even more powerful forces and 
 ambush the enemy upon the field of politics. For 
 pohtics will play no small part in the re-shaping of 
 industry. Already the war has led to the concen- 
 tration of immense powers in the hands of our states- 
 men and officials. It has brought about the temporary 
 nationalisation of mines and railways. It has given 
 us a public Ministry of Agriculture and Shipping and 
 Food. There is scarcely a department of the national 
 life which has been left untouched by State control. 
 And the return of peace, so far from loosening the 
 bonds, may well serve to draw them tighter. The 
 Government which handles the demobilisation of the 
 army, will exercise wide powers over the redistribution 
 of labour and the new conditions of employment, and 
 such an opportunity for central organisation it f could 
 not, if it would, refuse. The economic situation will 
 not allow of such a course. Food will be scarce and 
 famine perhaps perilously near. Raw materials will be 
 scarcer and industry sorely crippled by its lengthy 
 dislocation. Private capital will be exhausted by the 
 exigencies of war finance, and helpless to meet the 
 coming struggle for the world's markets. The crisis 
 (for it will be no less) will call for measures even more 
 autocratic and comprehensive than we have yet 
 witnessed ; and for the time being the Cabinet may be 
 compelled to take the whole business of production 
 and supply under its own control. Here then is the 
 Socialist's opportunity ; these sweeping, though 
 temporary, expedients surpass his wildest hopes ; 
 
i86 NEW FALLACIES OF MIDAS 
 
 and he may well see in them a stepping stone to a 
 full and permanent execution of his programme. 
 Yet while he is rejoicing over the triumph of the 
 cause, let him beware lest he shall have played into the 
 capitalists' hands and lest his be but a hollow victory 
 after all. The lessons of history are plain ; nations 
 have before now won comfort and security by bartering 
 away their independence ; and into the same fatal 
 error, Labour too may easily fall. That in the next 
 few years the working-man will obtain manifold con- 
 cessions in higher wages, more tolerable conditions 
 and better organisation against unemployment, this 
 is not to be doubted. But if when he accepts these 
 bounties from the State he accepts them upon terms 
 which curtail his liberty of action, his freedom of 
 contract and his power to fight, then he will have been 
 out-manoeuvred ; he will have lost the campaign. 
 
 (ii.) 
 
 For the reforms which seem to lead along the road to 
 Socialism,' may in reality lead us unsuspecting to a 
 very different goal. That goal is the Servile State. 
 The phrase and the political theory which it covers, 
 are alike Mr. Belloc's ; the Servile State is in fact the 
 peculiar bogey of his own invention. It is defined by 
 him as ''a condition of society wherein one class of the 
 people is constrained by positive law to labour for the 
 advantage of another class. " The mark and sign of 
 the Servile State is a legislation which discriminates 
 between two classes, the Capitalist class and the Pro- 
 letarian class, and which im.poses certain definite 
 obligations upon the latter, as proletarian, and because 
 it is proletarian, and accepted by them in consideration 
 of specific concessions whereby a decent standard of 
 comfort and security is guaranteed to them. The 
 Servile State is in short a compromise, through which 
 
THE SERVILE STATE 187 
 
 Labour's title to receive a fair wage, and Capital's 
 right to compel work in return, are alike ratified by law. 
 Now it is of the nature of all bounties and concessions 
 that they should carry with them a corresponding 
 obligation on the part of the recipient. If I accept a 
 favour from a friend, I am morally bound to do him 
 some favour in return. So when the Lady Bountiful 
 of fifty years ago provided her tenants with woollen 
 goods at Christmas time or soup when they were ill, 
 she expected that they on their part should " look 
 up " to her, should behave in such and such a manner 
 when they met her on the road, and in general should 
 recognise their status as inferior beings. All this 
 was doubtless very proper and, so long as the obliga- 
 tion remained a sentimental and personal concern, 
 quite harmless. But when the obligation becomes 
 impersonal or absolute and is exalted to the rank of 
 a theory, the case is different. To-day charity has 
 ceased to be a virtue and has become a science. The 
 poor man is no longer an object for benevolence and 
 almsgiving ; but for investigation, for supervision, and, 
 if need be, for disciplinary treatment. His state of 
 necessity is held to give his benefactors the right to 
 dictate humiliating terms ; and his submission to 
 various inquisitions and restrictions is a primary 
 condition of relief. The Charitable Body of to-day very 
 naturally insists that no help shall be given to any man 
 whose past, present and future conduct does not 
 conform to its own standards of right behaviour ; 
 nor would there be much harm in this perfectly just 
 procedure, were it not that consciously or uncon- 
 sciously the benefactors of the poor have been betrayed 
 thereby into a fixed and settled habit of mind. They 
 come to regard the poor not as ordinary members of the 
 community but as a class apart which, being proved 
 incapable of ordering its own affairs, is in need of 
 external direction and assistance. " If the poor will 
 
i88 NEW FALLACIES OF MIDAS 
 
 not work," says the charitable body, " they must be 
 compelled ; if they will not save, we must make them ; 
 if they will not keep their houses clean and healthy, 
 we must pass a law to ensure that the kitchen window 
 is kept open and the kitchen floor scrubbed out at least 
 once in a Week." The benefactor moreover belonging, 
 as he usually does, to a class which is capable of ordering 
 its own affairs, concerns himself solely with the 
 poor. For him the rich are above the law ; and if for 
 example some improvident gardener being dismissed 
 from my Lady Bountiful' s service, should fail to find 
 another post, should get into debt, pay no rent, and be 
 driven to apply to charity for aid, the Charitable Body 
 will thoroughly investigate his case. The Lady 
 Bountiful will be consulted, and if that ugly show of 
 temper in which the man indulged can be shown to have 
 been an abnormal aberration, something may be done 
 to find him fresh employment. The curious coinci- 
 dence that my lady has dismissed three gardeners in a 
 fortnight does not interest or concern the Charitable 
 Body in the least. Their duty in such a case is to 
 mind their own business — and the business of the poor. 
 In what light the poor themselves regard these well- 
 meaning efforts, and whether they accept them with a 
 good grace or an ill, does not concern us here. The 
 point to be noted is this, that the poor are now held in 
 theory to be a separate class, possessing a different 
 status and requiring a different treatment from the rest 
 of the community. Such a theory, if accepted by the 
 poor, may accustom them to a tame submission and to 
 the further acceptance of whatever is put upon them. 
 But it might even so be regarded as a harmless and 
 genial foible of the rich, Were it not that the State itself 
 appeared to countenance the theory. For Parliament, 
 intent upon improving the conditions of the poor, 
 has been not a little influenced by energetic theorists. 
 Laws have in fact been passed which not only dis- 
 
THE SERVILE STATE i8g 
 
 criminate between the classes, but which even appear to 
 legitimise the difference of class status. Now there 
 are many laws, it is true, which of their very nature 
 must apply to some sections of the community and not 
 to others ; there must be laws which regulate the acts 
 of milkmen (in respect of watering their milk) or of the 
 clergy (in respect of the ritual they shall observe). 
 But the type of legislation with which we are con- 
 cerned, goes differently to Work. It says in effect to the 
 citizens, " I recognise that there are among you two 
 classes, employers and employed. These two classes 
 moreover bear in their life and Work certain mutual 
 relations towards each other. These relations I shall 
 make it my business to control, regulate and adjust. 
 Your business as citizens is to accept the classification 
 and to behave accordingly. You who are employers 
 shall behave in such and such a manner to those in your 
 employ ; I will draw up rules for your direction. You, 
 the employed, shall receive a separate code of duties, 
 differing from those of your employer, and made to suit 
 you because you are employed. It will be greatly to 
 your interest to observe them." Now legislation of this 
 sort has become of late years increasingly common. 
 Let us take an obvious instance, the Act concerning 
 Employers' Liability. Under this law the Employer's 
 obligation is alone concerned. If any accident or 
 damage, whether due to carelessness or misadventure, 
 should befall a man Working in his employ, then he, 
 the employer, must compensate that workman in such 
 a 'manner as the State directs. The workman himself 
 has no corresponding duty. Under the Insurance Act 
 however, the duties of both parties are defined. The 
 employer's duty is to put by a weekly sum for the 
 purchase of a Government stamp ; the workman is to do 
 the same ; and out of their combined payments, 
 together with some addition from the taxes, the work- 
 man is provided with drugs and medical advice. In 
 
igo NEW FALLACIES OF MIDAS 
 
 the case of either law, the State has definitely accepted 
 the theory of class status, and has legitimised it by a 
 differentiation of class duties. In either case, the 
 working man, because he is a working man, is entitled 
 to make certain specific claims on his employer. It 
 should be noted, however, that though equally engaged 
 upon an act of service to another man, a member of the 
 employer class, because he is a member of the 
 employer class is entitled to make no such claim. 
 " If," as Mr. Belloc puts it, *' I contract to write for a 
 publisher a complete History of the County of Rutland, 
 and, in the pursuit of that task, while examining some 
 object of historical interest, fall down a pit, I should not 
 be able to recover against the publisher. But, if I 
 dress in mean clothes, and the same publisher, deceived, 
 gives me a month's work at cleaning out his ornamental 
 water, and I am wounded in that occupation by a 
 fierce fish, he will be mulcted to my advantage and that 
 roundly." Here then, albeit under a new form and 
 with a somewhat different bias, is that old familiar 
 travesty of social justice, one law for the rich and 
 another for the poor. 
 
 But, though at first sight this type of legislation 
 appears to proceed from a socialistic bias, and to 
 favour the poor at the expense of the rich, it may in 
 the last resort produce the very opposite result. For 
 the legislator has not yet fully disclosed his hand. 
 Having firmly established the principle of such legis- 
 lation, having drawn a firm line between the classes, 
 and by such baits as he can offer having enticed the 
 working class to an acceptance of their status, suppose 
 that he should turn to them and say, " It has been my 
 habit for some years past to regulate the conditions of 
 your labour. I have seen to it that you shall obtain 
 adequate redress for whatever injury or damage you 
 sustain in the performance of your work. I have also 
 thought fit to direct you concerning the duties of your 
 
THE SERVILE STATE 191 
 
 station ; in return for a trifling though compulsory 
 payment, you have received the attendance of my 
 doctors. In all this I have required more at the hands 
 of your employers than at yours, and they have not 
 failed me. It is your turn now, I propose that you 
 shall work for the said employers in perpetuity, without 
 liberty of contract and at such a wage as I shall here- 
 inafter fix. Such an arrangement I need hardly say 
 will greatly ease the organisation of our national 
 industries and secure our regular out-put of production 
 against all vexatious and needless interruption." No 
 legislator, of course, would ever put the case in such 
 blunt words as these. But it is not difficult to foresee 
 how he may proceed to the same end. First, he 
 enforces amid the acclamations of the poor, the pay- 
 ment of a standard minimum wage ; so far good ; 
 if the employers grumble, no matter Next, this will 
 very naturally be followed by a general scheme of 
 compulsory insurance, whereby a man out of employ- 
 ment will find himself supported by the State (largely 
 perhaps at the employer's expense). Good also; 
 the poor man is now secure against every accident of 
 fate. Presently, however, it comes to light that there 
 are certain indolent persons who finding the Unem- 
 ployment Benefit sufficient for the support of life (for in 
 justice to the honest worker it could hardly be less) are 
 beginning to show a sad distaste for work, and are 
 none too eager in their attempts to find a job. This 
 condition of affairs our legislator can scarcely tolerate. 
 Wastrels cannot be supported out of the public funds ; 
 and there is but one remedy. These men who will not 
 work must be compelled.* If they refuse to engage 
 themselves to an employer they must be put under 
 official supervision, and sent to a Labour Colony or 
 whatever it be called. This place of detention will 
 
 ♦ To withhold the payinent of the Unemployment Benefit would be 
 compulsion of a more' subtle sort, but not differing in principle. 
 
192 NEW FALLACIES OF MIDAS 
 
 also meet the case of those who from physical weakness 
 or deficient intellect may be counted as unemployable j 
 that is to say, constitutionally incapable to render such 
 amount of service to a master as a master would hold 
 to be an adequate return for the wage prescribed by 
 law. Our legislator might now pause from his labours. 
 Industry is settled upon so firm a basis that nothing 
 short of a rebellion of the workers could upset his 
 masterly edifice. 
 
 Such, according to Mr. Belloc, are the logical ante- 
 cedents of the Servile State. They may proceed from 
 the motives of high minded men who are eager to do 
 the poor a service. They may even be Welcomed by the 
 poor themselves, preferring security of work and a life 
 of decent comfort (for such at least the Servile State 
 would offer them) rather than the precarious 
 advantages of industrial independence. But so 
 surely as every favour is balanced by a corresponding 
 obligation and every right by a duty, there can never 
 be true liberty for those who lean too much upon the 
 bounty of the State. Like Esau, they would have 
 bartered awa}^ their birthright for a mess of not 
 unpalatable pottage. 
 
 (iii.) 
 
 Thus comes the chance for the Capitalist who is hard 
 pressed by Socialism, but not beaten, to snatch victory 
 from defeat. The very weapons with which Labour 
 conies armed against him, he may turn against itself. 
 If Labour can initiate legislation, so can he. And 
 under the appearance of yielding to the Socialists he 
 may induce them to play into his hands. For though 
 here and there he must yield a little ground or make 
 perhaps even considerable concessions, yet he would 
 be repaid ten fold for what he lost. Under the Servile 
 State (could he but bring it into being) he would be 
 
THE SERVILE STATE 193 
 
 no longer a bargain driver haggling and manoeuvring 
 with Labour, but master absolute. Instead of a 
 rebellious, half tamed company of workers, eager to 
 assert their independence, for ever demanding higher 
 wages, calling strikes and quarrelling with the discipline 
 of the work shops, he Would now command an army 
 of docile and contented helots. For whatever 
 advantage of treatment or condition the workers 
 would have gained, they would none the less be slaves, 
 bound by the peculiarity of their status to a life of 
 compulsory toil. Nor is *such a conjunction of 
 industrial servility and material well-being a mere 
 fantasy of the theorist. Even in the civilisations of 
 antiquity such a thing Was known. At Athens where 
 an aristocracy of free-men owed the ease and culture 
 of their prosperous lives to a system of slave-labour, 
 the slaves themselves were on the whole well fed, well 
 used and tolerably content. The Servile State does not 
 of necessity involve a proletariat so degraded as the 
 serf labourers pictured by Mr. Wells in " When the 
 Sleeper Wakes," a soulless mass of human mechanism 
 dispossessed of all privileges and powers, and con- 
 demned to toil in a swarming metropolis of engine 
 rooms and factories for the benefit of their Olympian 
 despots of the upper air. On the contrary, the 
 proletariat of the Servile State would find their 
 happiness increasing rather than diminished. Accus- 
 tomed by the slow degrees to the restrictive influences 
 of servile legislation, they w^ould lose their appetite for 
 liberty and cease to recognise the change. Intent upon 
 the flesh-pots of the present they would forget the lost 
 privileges of the past, and would look back perhaps with 
 pitying disdain to the unhappy epoch of King George 
 the Fifth. For to the outward eye, at least, they 
 would hardly be distinguishable from the more 
 prosperous among the workers of to-day. 
 
 Such, it would seem, is Mr. Belloc's forecast of our 
 
194 NEW FALLACIES OF MIDAS 
 
 destiny. For while most Englishmen are slow to 
 understand the deep and hidden issues of a struggle, he 
 with that keen faculty of discernment which springs 
 from his French blood and Latin sympathies, detects 
 the shifting breeze in every straw and scents the coming 
 change. So he sees much to which other folk are 
 blind. For the Servile State does not come with 
 observation, but by slow and almost imperceptible 
 degrees ; so that until its evolution is completed, men 
 might scarcely be aware of its existence. None the 
 less, if Mr. Belloc read the signs of the times aright, 
 England in 19 14 was surely moving towards this 
 fatal end. How we stand now and in what fashion our 
 political development has been changed or arrested by 
 the accidents of war, it is almost impossible to tell. 
 The war has bred among the working population a 
 nevN^ and revolutionary spirit, which aspires at most to 
 dominate the State, and which claims at the very 
 least to arrange the affairs of Labour in Labour's own 
 way. The working Trades Unions are now no less 
 suspicious of the State officials than they were of the 
 employer. Not merely will they resist whatever 
 attempts are made to coerce them into submission, but 
 they will distrust all political interference, however 
 honestly intended, in the reorganisation of industrial 
 conditions. And along with their new consciousness 
 of power have come new opportunities for exerting it.* 
 Owing to the necessities of war practically the whole of 
 organised or Trades Union Labour has become the 
 servant of the State. Working as they do upon 
 production which is essential to the continuation of 
 hostilities, they have been in a position to levy a kind of 
 blackmail upon the Government and to extort all 
 manner of concessions. The income of this section of 
 
 * The following interpretation of contemporary conditions is based 
 upon the articles contributed to the Times by a correspondent in 
 vSeptember, 191 7. 
 
THE SERVILE STATE 195 
 
 the community has already increased by upwards of 
 two-thirds. Nor have they any intention of relinquish- 
 ing what they have already won ; on the contrary their 
 demands increase at every step. They now represent 
 as it were, a nation within the nation, well organised, 
 well paid and still dissatisfied. Over against this 
 Labour '' nation " there exists another, about its 
 equivalent in numbers, not upon the average, 
 possessed of larger incomes, and entirely lacking in its 
 sense of unity and power of co-operation. The ranks of 
 this other " nation " are composed of various elements, 
 the employers (now themselves the servants of the 
 State) the professional classes, the working men who 
 are not organised, and the independent bourgeoisie. 
 These elements are united only in their common loyalty 
 to the State, and in a vague determination to preserve 
 its authority against the tyrannical claims of the 
 revolutionary faction. In other words, the old classi- 
 fication of Capital and Labour has ceased for the present 
 to exist ; and the struggle lies now no longer between 
 the employers and the employed, but between the 
 close knit army of organised producers on the one hand 
 and this heterogeneous medley of independent citizens 
 on the other. Upon the issues of this struggle all hopes 
 of an orderly and stable settlement depend. If Labour 
 is reasonable, if it acts with restraint, and if it is content 
 to trust its Parliamentary spokesmen and attain its 
 ends by regular and constitutional methods, then it 
 may shape its own destiny and win both security and 
 comfort without sacrifice of its industrial liberty. 
 If however, it presumes upon its monopoly and presses 
 its demands too far, worse still, if it should appeal to 
 force, establish mob rule and wrest all control of 
 policy from the hands of its recognised leaders, then 
 the consequences will be more doubtful and more 
 perilous. For, when things have come to such a pass 
 there can be no turning back. The strength of the 
 
196 NEW FALLACIES OF MIDAS 
 
 two " nations " must be put to a decisive test. 
 Whether victory will lie with the Individualist section, 
 rallying to the support of Government for the preserva- 
 tion of the State, or whether it may incline (for the 
 time at least) to the forces of revolutionary Labour, 
 we cannot tell.* But this much we may safely guess, 
 that Labour having forfeited all claim to a liberty 
 which it had so abused, could not be received again 
 into State except upon most binding and perhaps 
 humiliating terms. Defeated, it must submit to such 
 conditions as would compel it for the future to the 
 proper and orderly performance of its duties. Its old 
 privilege of industrial independence would be abro- 
 gated ; the strike perhaps forbidden ; the terms and 
 conditions of employment regulated by statutory law, 
 and if behind the law stood Capital victorious and 
 dominant, the sequel would not be in doubt ; we 
 should have the Servile State. Nor would it be the 
 first time that revolution has been followed by like 
 reaction and an excess of liberty has led to its opposite 
 extreme. 
 
 * Perhaps it would be more honest to say that we think we can. All 
 past experience of English character goes to prove that the revolutionary 
 section would stand very little chance of even temporary success. 
 It is not merely the Individualist section that would combine against 
 it. Organised Labour itself would be utterly opposed to mob-rule 
 such as we have seen in Russia. The authorised leaders of the Unions 
 would resist anarchy \vith all their power and would even be prepared 
 to take office to avert it. For this reason whether as an estimate of the 
 present situation or as a forecast of the future, the thesis quoted above 
 is probably erroneous. It assumes far too lightly that the Labour 
 movement as a whole can be identified with the revolutionary parts of 
 it. It may be true perhaps that in some cases its leaders are out of 
 touch with the ambitions and ideas of the rank and file who thus get 
 out of hand. They are often too old and their opinions out of date. 
 But this is in fact due largely to the conservative instincts of the British 
 working man, who will not willingly discard a trusted and well-tried 
 representative, even when he is no longer a true leader in thought or 
 action. But the very same instinct which produces this anomaly, will 
 undoubtedly serve to check the more eager and unbalanced spirits who 
 seek to take undue advantage of it. 
 
Chapter XV 
 SYNDICALISM OLD AND NEW 
 
 (i) 
 
 But how, if the decision should fall the other way ? 
 If Labour were victorious what use would it make of 
 victory ? Could the Unions hope to build up the 
 industrial and political edifice afresh on the ruins of the 
 Capitalist past ? Are they ready to construct as well 
 as to destroy ? To these questions Syndicalism 
 provides the answer. 
 
 When Syndicalism first emerged into English day- 
 light, it came with an air of mystery and an obscure 
 rnenace of revolutionary troubles. The respectable 
 citizen, puzzled by its unfamiliar name and disturbed 
 by the omens of the great railway strike in 1911, 
 denounced it vaguely without being well aware what 
 manner of thing it was. But fuller knowledge more 
 than confirmed his fears. Syndicalism, as he saw it, 
 possessed all the worst vices of Socialism, with none of 
 its merits. That the control of Industry should pass 
 into the keeping of the State, he had considered as 
 hazardous, but not as an unthinkable proposition ; 
 but that the workers themselves should lay their untried 
 hands upon that tremendous power, this seemed to 
 strike at the very foundations of social stability ; 
 in the respectable citizen's eyes it meant the sure ruin 
 of England. But if such doubts and fears were felt 
 by the middle classes and even by the more conserva- 
 tive among the working men, the go-ahead Unionist 
 did not share them. He was already tiring of Socialistic 
 
 197 
 
igS NEW FALLACIES OF MIDAS 
 
 propaganda, and disheartened by the slow progress of 
 Socialistic policy, perhaps more than a little frightened 
 too at the practical results of Socialistic legislation. 
 He was beginning to realise that by embracing Socialism 
 he would effect nothing but a change of masters, and 
 that in the long run the little finger of the State might 
 well prove thicker than the Capitalist's loins. The 
 promise of Syndicalism offered a different and more 
 tempting prospect. Once let its claims be carried into 
 practice, and he would be beyond denial his own master. 
 Give the workers the control of the workshops and they 
 would achieve at a bound all the ends for which they 
 had recently been fighting (for of late years it had been 
 workshop conditions far more than wages which had 
 been the point of issue with the masters). Last and 
 not least, rid industry once and for ever of the Capitalist 
 exploiter, and the whole profits of industry would 
 henceforward go direct to the men whose labour had 
 produced them. In the face of such proposals, it is 
 small wonder that the respectable citizen felt nervous 
 and perplexed. 
 
 Syndicalism was first born among the French. To 
 that quick-witted high-spirited people, a theory 
 approved is no longer a theory but a passion and an 
 enthusiasm. So Syndicalism, like the democratic ideal 
 of the Revolution, soon became the French working 
 man's religion, to be preached and practised with 
 fanatical devotion.* Once convinced that Labour's 
 only hope lay in the Capitalist's destruction, the 
 Syndicalists lost no time in declaring on all property 
 and all masters a truceless and perpetual war. It is a 
 war in which no concessions can be accepted as 
 adequate, no promise considered to be final, in which no 
 
 * It must however be remembered that the organised labour of 
 France is numerically weak. The membership of the Unions or 
 vSyndicats is little over one million as against four or more in England. 
 After all France is still in the main an agricultural country. 
 
SYNDICALISM OLD AND NEW 199 
 
 weapons may be neglected which might ensure success, 
 and no agreement kept when it is better broken. The 
 campaign will be long and bitter ; but it will move, 
 so Syndicalists declare, to a grand and victorious cHmax, 
 in which by some vast revolutionary upheaval the 
 powers of Capital will at last be vanquished and over- 
 thrown, and Labour emerge the lord and master of its 
 own destiny. Then, all rights of ownership will be 
 abolished, all property be vested in the great organised 
 Unions of productive labour. This step appears to 
 them both inevitable and right ; for, inasmuch as the 
 eternal and fundamental necessity of life is to produce, 
 nothing can in the long run withstand the producer's 
 claim to manipulate the world. As for the 'State, the 
 Syndicalist will find no further use for this meddlesome 
 busy-body, which does but hamper the freedom of 
 economic man with its outworn traditions and irre- 
 levant side issues. Therefore, lest it should seek to 
 interfere with the new born scheme of things, the State 
 too, like the master, must be swept away. For 
 Syndicalism (in its most violent form at least) rejects 
 all ties of race, country or religion. It sees nothing in 
 life but the struggle for bread, nothing in history but 
 the ebb and flow of markets. It is as though the 
 hands and the belly had conspired together to deny 
 the existence of the head and heart. 
 
 Frenchmen will die for a theory ; but Englishmen 
 have always regarded theories with cautious suspicion. 
 Show them that a scheme will work and they may 
 perhaps be brought to believe in it, but even so they 
 will be slow to put it to the test of practice. Not that 
 the English working man is lacking in idealism ; on 
 the contrary it is his very idealism that saves him from 
 being carried off his feet by a one-sided truth ; it tells 
 him that economic man is not the whole man ; it 
 tells him that bread and butter is not the sole end of 
 life. The claims of nationality are binding on him yet ; 
 
 14 
 
200 NEW FALLACIES OF MIDAS 
 
 and even before he suffered the stern schooling of 
 war, he had, as a rule, more sense than to deny them. 
 So Syndicalism of the more fantastic and visionary 
 type, which would sweep away national boundaries 
 and destroy the authority of religion and of State, can 
 never take root deeply here in England. Hot-headed 
 enthusiasts may use its more exaggerated doctrines 
 to foment disturbance and unrest ; it may suit agitators 
 to represent the State as the Capitalist's friend and the 
 working man's natural foe ; and for a while perhaps 
 the masses may believe them. But the saner apostles 
 of English Syndicalism are not deceived by such 
 nonsense. They know well enough that the State in a 
 democratic country is neither the friend nor the foe of 
 the people ; for it is the people itself. So they see 
 that Syndicalism too will need the State, and that if it 
 seeks to destroy the constitutional fabric it will work 
 sheer chaos. Without the mediating and restraining 
 influence of centralised authority, the different groups 
 of workers would speedily fall to quarrelling. The 
 policy of one group would clash with the policy of 
 another ; builders would turn against agriculturists 
 and transport workers be the enemy of both. 
 Divergent interests would drive them into bitter 
 antagonism, and the strongest group would make of its 
 monopoly an instrument for the tyrannical subjection 
 of the rest. Orderly government is a necessary con- 
 dition of economic prosperity no less than of political 
 security. There must be supreme authority to con- 
 sult for the general interest, and execute the general 
 will ; and supreme authority is helpless without force 
 to back it. If the State did not exist. Syndicalist 
 society would be under compulsion to invent it. 
 
 According to our wiser Syndicalists therefore the 
 State must be supreme, supreme not only to save the 
 producers from suicidal competition, but also to watch 
 over the consumer's interest. In other words it must 
 
SYNDICALISM OLD AND NEW 201 
 
 exercise a general control over production and to this 
 end it will need wide powers. First, it must own the 
 sources of production. If property is a crime against 
 society, there can be no reason under heaven why the 
 miners should possess the mines ; nor if they did, could 
 anything prevent them from misusing their privilege. 
 Half the industries of the country would be wholly at 
 their mercy ; and their monopoly would be as dangerous 
 and despotic as the power of some great Trust. 
 Nationalisation therefore, must be the first condition 
 of Syndicalist success. And secondly, the State must 
 control the character of the output and its price. 
 Obviously it is for the consumer to say both what he 
 requires and how much he is prepared to pay for it ; 
 and it will be the State's business as the consumer's 
 representative (since all its citizens are consumers) 
 to meet their wishes and arrange with the producers 
 accordingly. Not that the interests of the latter will be 
 overlooked. The producers are citizens also ; and the 
 State will not demand impossibilities ; nor will it 
 seek in regulating prices to rob the workman of his due. 
 Payments will correspond with the value of service 
 rendered ; in proportion as each Trade gives, in the 
 same proportion it will also receive. But the reward of 
 production will no longer be dependent on the accidents 
 of supply and demand, nor vary with fluctuations of 
 the m^arket. Every service will have its settled price ; 
 and the wage system as we know it will disappear 
 altogether. 
 
 But having settled what goods shall be delivered and 
 upon what terms, the State (so they say) must interfere 
 no further. In what manner and under what con- 
 ditions the goods shall be produced is the producer's 
 business and may be left to the producer to control. 
 The whole internal economy of industry therefore will 
 remain in the hands of the Unions. Each Union, 
 extended now to embrace an entire Trade (or even a 
 
202 NEW FALLACIES OF MIDAS 
 
 group of kindred Trades) will be master in its own 
 house. In all matters of detail the members of the 
 Union will have their say. They will elect stewards 
 and foremen who will be responsible for the discipline 
 of the workshop, and they will nominate the managers 
 who will undertake the wider duties of supervision and 
 control. They will have a deciding vote upon questions 
 of promotion or admission or dismissal, as Well as in the 
 settlement of working hours, holidays, terms of appren- 
 ticeship and conditions of employment generally. 
 Over matters of larger policy, where technical know- 
 ledge is required, the delegates of the various workshops 
 will meet in consultation. These delegates will fix 
 the scale of salaries and wages, whereby the profits of 
 the business are fairly apportioned to different grades 
 of workmen. They will employ the advice of experts 
 in the choice of processes and machinery.* and lastly, 
 they will act as a connecting link between the Union 
 and the State. Thus organised each industry will 
 become as it were a miniature republic, administered in 
 ways of its own pleasure, and governed by officers of 
 its own choice. Authority will be delegated from 
 below, and not imposed from above. The producers 
 will be the willing servants of the community, but not 
 its slaves. In short, the true emancipation of Labour 
 will be reached not through the numbing officialdom 
 of State control, but through the living democracy of 
 the Workshop. 
 
 * The workers have not in the past shown themselves good judges 
 of the value of invention. The fear is always present with them lest a 
 new machine may set their skill at a discount and throw a proportion 
 of them at least out of employment. But the consumer's interest 
 does not allow of the retention of old-fashioned and un-economical 
 processes. Therefore, as Mr. G. D. Coles suggests, the consumer must 
 have a voice here ; and the control of this department of industry might 
 profitably be shared by the representatives of the State as well as of the 
 Unions. 
 
SYNDICALISM OLD AND NEW 203 
 
 (ii.) 
 
 Such a scheme, blending as it were both Socialism and 
 Syndicalism in one, is far more reasonable and far more 
 practicable than the vague propositions of the French. 
 It has been formulated and even sketched in detail by 
 up-to-date economists, who, harking back to the history 
 of the Middle Ages, would give to their great Industrial 
 Unions the more familiar and national name of Guilds. 
 It is an idle fancy to summon dead ghosts out of the 
 past ; and to recall historical precedents will not in 
 reality help us much in the solution of modern difh- 
 culties. Nevertheless, though the actual mechanism 
 of the mediaeval guilds would scarcely fit into the 
 framework of contemporary industry, yet there is 
 muchfin this theory of Guild Socialism which would 
 meet the needs of the working-man of to-day. For his 
 present discontent arises from social as much as from 
 economic causes. He is cosncious now that, whatever 
 his political status may be, he is still in some sense a 
 slave. He retains his job or loses it at a master's 
 pleasure; submits to the precarious justice of a foreman 
 whom a master has appointed to order him about ; 
 toils at a task prescribed according to a master's 
 methods and under a master's rules, and performed to 
 swell withall the profits of a master's purse. Worse 
 still, this master is a person he does not know, perhaps 
 has never met ; a vague invisible authority which 
 controls its workmen, like so many marionettes, from 
 behind the scenes. Often this master is not even one 
 man, but many, a scattered company of shareholders 
 who feel no interest in their employees' welfare and to 
 whom their employees can make no direct appeal. 
 And for these men he must perform a narrow round 
 of exacting duties which offer little scope for indepen- 
 dence or ambition. Such a system will not conquer the 
 spirit of the more robust ; but the weaker brother is 
 
204 NEW FALLACIES OF MIDAS 
 
 simply crushed by it ; in working hours he can scarcely 
 call his soul his own ; and he feels (as one man himself 
 expressed it) " like a rat in a trap." It is not surprising 
 therefore that the average working-man regards his 
 routine of labour as so much uncongenial drudgery. 
 It is a good sign and not a bad sign that he is out of 
 patience with his lot ; for his impatience springs from 
 an inarticulate desire to find in his day's work some 
 fuller realisation of himself, and to control by his own 
 will and choice that which is after all the main business, 
 and which ought to be the main interest of his life. 
 Yet there is no royal road to industrial happiness ; 
 and it would be idle to pretend that the path of Guild 
 Socialism could all be smooth. Not even Labour would 
 find it easy, for example, to serve two masters ; and 
 between State and Guild disagreements Would be 
 certain to arise. Under any such system of dual 
 control, there must be border line questions over which 
 debate might lead to friction, friction to antagonism, 
 and antagonism to a trial of strength. So, too, between 
 the different Guilds there would still be room for 
 jealousy and competition ; for even when the motive 
 of profit making is done aWay, there remains many a 
 possible bone of contention, apprentices to be selected, 
 sites of factories to be chosen, machinery to be procured. 
 All this Would call for much tact and statesmanlike 
 restraint among the chosen leaders of the Guilds ; 
 and of this they may easily fail. The history of their 
 mediaeval prototypes will hardly prove that such 
 corporations must always of necessity possess the 
 high disinterested souls which some would picture. 
 Nor does the past history of Trades Unionism itself 
 offer any sure guarantee of honourable and orderly 
 behaviour. There are overmany blots upon that 
 record, reminding us of pledges broken, contracts 
 cancelled, and leaders' authority defied, of demands too 
 often pressed without regard to public interest, or 
 
SYNDICALISM OLD AND NEW 205 
 
 sense of due proportion, of deliberate fomentation of 
 class antagonism, and even of open contempt for all 
 ties of nationality and all duties of citizenship. Yet 
 does not the cause of all this lie, at bottom, in the long 
 standing feud with the employer ? and if the cause were 
 removed, may not we hope that a better spirit would 
 prevail ? Even now there is a bright side as well as a 
 dark to the Trades Union record. The English labourer 
 can be generous to a fault, when his own people are 
 concerned. He will " doWQ tools " and accept the 
 loss quite cheerfully in support of causes which 
 (directly at least) are not his own. When fellow 
 workers are on strike and starving, he has been known 
 to send them food, and the self-imposed restrictions 
 upon earnings are proof that in the policy of the Unions 
 the interest of the Weaker brethren is not forgotten. 
 It will require no doubt many years of education and 
 experience before the self-governing workshops can 
 achieve complete success ; but where self government 
 has already been attempted, the men have proved 
 themselves good judges in the choice of officers. And, 
 even if at times they have thrown their leaders over, 
 they are not the only sinners, politicians have been 
 known to do the same. In short, there is reason enough 
 for confidence in the future of British Labour ; and it 
 is after all a poor compliment to British character if 
 the masses must be thought incapable of loyal 
 obedience, or unfit to be entrusted with the use of 
 power. 
 
 To withhold power from men for fear of its abuse 
 is always the argument of the faint heart ; for only by 
 the exercise of power can the proper use of it be learnt. 
 Nobody can learn to swim who is not allowed to 
 enter the water ; and Democracy in industry as in 
 politics, must always be in some degree a leap in the 
 dark. So one day, — it may be soon or it may be late 
 — the reward will be found worth the venture ; for the 
 
2o6 NEW FALLACIES OF MIDAS 
 
 reward is sure. Towards the formation of human 
 character and the promotion of human happiness 
 industrial democracy will do more than political 
 democracy has ever done. The mere exercise of a 
 vote in the choice of officers, the planning and dis- 
 cussion of the details of workshop policy would train 
 men as nothing else could in true independence of 
 judgment and true self -discipline of choice. The more 
 too a man is free to govern and direct the circumstances 
 under which he works, the greater will be his interest 
 and satisfaction in that work. This sense of freedom 
 was what gave to the Athenian and mediaeval craftsmen 
 their astonishing pride and pleasure in their work. It 
 is often supposed, but quite Wrongly so, that the Greeks 
 despised all manual toil. \Vhat, in reality, they hated, 
 Was to give out their services on hire, in a word, to 
 turn themselves into wage-slaves. Free independent 
 craftmanship, which left him free to work at his own 
 time and in his own way, the Athenian honoured and 
 practised with cheerful energy. Now it is true, under 
 modern conditions, such complete independence is no 
 longer possible. The work of our industries is highly 
 organised and demands the strict co-operation of 
 trained teams ; its discipline leaves little room for 
 individual liberties and whims. But, discipline, where 
 it is the discipline of spontaneous choice, is often the 
 making of a man. It was a volunteer in Kitchener's 
 army who discovered that even military routine gave 
 a fresh meaning to life, and tTiat the individuality 
 which is lost in a crowd may be found in a battalion. 
 Even the monotony of such labour (and in the 
 specialised processes of modern industry monotony 
 can scarcely be avoided) might be mitigated by a sense 
 of freedom ; and, however toilsome a task may be, it 
 is often to be redeemed by the spirit in which it is done. 
 Work performed in a dull spirit of slavish drudgery can 
 never be happy work ; work given in the wiUing spirit 
 
SYNDICALISM OLD AND NEW 207 
 
 of spontaneous service is its own reward. The 
 attitude of mind is more than half the battle ; and 
 nothing is more certain than that a system which Works 
 (as the present system does) against the grain of human 
 nature, cannot endure for ever. So long as the 
 employees feel that they are merely profitable tools 
 in the employer's hands, there can be no final remedy 
 for the prevailing discontent. 
 
 There remains perhaps a doubt, and a reasonable 
 doubt, whether industry conducted on Syndicalist 
 lines would be so successful or efficient as it is under 
 Capitalist control. An autocracy can always accom- 
 plish much that democracies are helpless to attempt 
 and Kaiserdom is a more powerful instrument of 
 rnaterial success than a republic. And it must be the 
 same with industry. It will be long for instance 
 before the self-governing guild could bring the right 
 men into positions of command and still longer before 
 it could learn to render them implicit trust and loyal 
 obedience. Nor could we expect from these elected 
 leaders the enterprise, the initiative, the " push and 
 go " which is thought to be the special virtue of the 
 independent business magnate. A manager who is 
 answerable to a jealous body of constituents cannot 
 indulge in hazardous experiments or embark upon far 
 reaching schemes on his own responsibility. So we 
 cannot but question the power of Syndicalism to 
 ensure economic prosperity : nor avoid altogether a 
 fear lest it should turn the wheels of progress back. 
 Yet to admit or rather to approve this doubt is simply 
 to condone the false ideals of the past. It was the 
 Manchester School who taught us to place our whole 
 trust in individualist enterprise, and to pursue effi- 
 ciency at whatever cost. Too often their efficiency 
 meant nothing else but self-aggrandisement and their 
 boasted enterprise the loss and ruin of other men. 
 Much of their energy was directed to unworthy ends, 
 
2o8 NEW FALLACIES OF MIDAS 
 
 the defeat of a rival firm, the deception of a credulous 
 public, or the exploitation of sonie tropical region which 
 would have been better and happier if left untouched. 
 Their philosophy was the philosophy of the old adage 
 that " those should take who have the power and those 
 should keep who can," and their economic policy was 
 in essence the same as the political creed of the dis- 
 credited Jingo. But just as Democracy has now 
 repudiated the old methods of diplomacy, and the 
 spirit of mutual tolerance and co-operation is, as We 
 hope, to supersede the traditional selfishness of nations, 
 so the ideals of business also may be changed. The 
 morality of the counting house need not perpetuate the 
 bankrupt morality of kings ; and the days may yet 
 come when the crude gospel of individualism will 
 cease to be the unchallenged creed of commerce, and 
 when to "make money" and to "get on" are no 
 longer considered the sole criterion of success. 
 Germany has taught us that efficiency does not of 
 necessity mean virtue nor even happiness ; and if we 
 believe that through freedom men may come to lead 
 more useful arid more worthy lives, then all the mis- 
 takes and failures which freedom must bring with it 
 need never shake our faith. Democracy may be unable 
 to make good one half of all its promises ; it may not 
 spread peace and goodwill over the world ; it may not 
 bring the best brains to the front ; it may not make 
 everybody rich. But this much it can claim beyond all 
 denial; that it offers to every individual what no other 
 system can, the double opportunity of personal liberty 
 and public service ; in which combination is embraced 
 the whole duty of man. At any rate we are pledged 
 to democracy now, and it is too late to return upon our 
 tracks. If in truth we are to distrust the people's 
 right to manage their own affairs, then for three years 
 We have been fighting on the wrong side. If freedom 
 is a mistake and democracy a failure, the Germans 
 
SYNDICALISM OLD AND NEW 209 
 
 were right after all ; and the allied nations who have 
 followed an illusion are of all men the niost miserable. 
 Nevertheless, though Syndicalism is in one sense the 
 natural and logical development of democratic prin- 
 ciples as applied to industry, yet in another sense it 
 may be found to violate something to which even the 
 rights of the majority are not superior, I mean the 
 rights of man. For while it offers much liberty with 
 one hand, it takes away more with the other : it 
 delivers the weak from the tyranny of the strong only 
 to enthrall both strong and weak alike to the tyranny 
 of a system. When Syndicalism claims to solve the 
 industrial quarrel of modern times by removing the 
 privilege of property from individual hands, it is 
 destroying a liberty which has been perhaps more 
 permanently and deeply rooted in our economic life 
 than any other. Such a liberty is open to abuse; and 
 abused it certainly has been. The Syndicalist has made 
 a protest which must be heard and will be heard in part. 
 But like most enthusiasts he overstates his claim ; and 
 whatever justice We may acknowledge in his champion- 
 ship of the producers' rights, yet when he attacks the 
 rights of ownership. We cannot but doubt the wisdom 
 and the justice of so violent a departure from a tradition 
 which is almost as old as man himself. For in the slow 
 growth of ages, there is more than the wit of a few 
 enthusiasts or the impatience of a single generation 
 can replace ; and an edifice which has taken centuries 
 to build may crumble in a night-time, when the 
 corner-stone is once removed. 
 
Chapter XVI 
 THE RIGHTS OF THE INDIVIDUAL 
 
 (i.) 
 
 It is perhaps the strangest paradox of human progress 
 that as our ** freedom broadens slowly down from 
 precedent to precedent, " the circle of our individual 
 liberties grows narrow and more narrow. The citizen 
 of a modern state knows none of the licence which his 
 primitive and savage ancestor enjoyed. If he meets 
 his adversary in Fleet Street, he may not beat him on 
 the head with his umbrella, or relieve him of his ready 
 cash ; he may not even call him names. The shackles 
 of law and convention hamper his liberty at every turn ; 
 and in every detail of his life ; it is forbidden him to 
 sleep out at night in public places, to gamble in the 
 railway train, or to shoot his rubbish from Westminster 
 Bridge. And every year sees new acts placed upon 
 the statute book, fresh regulations added to the bye- 
 laws. So the list lengthens ; and we pursue the 
 phantom of liberty by augmenting the criminal code. 
 Now the passion for order and uniformity is, like most 
 things, wholesome enough in moderation ; yet it is 
 very dangerous when pressed too far. If I procure the 
 passage of a law to restrain my neighbour's actions, 
 it is well to remember that I place myself and all other 
 citizens under a like restraint, and that in our zeal 
 to punish the misuse of freedom in others we are only 
 too likely to check the fount of freedom in ourselves. 
 
THE RIGHTS OF THE INDIVIDUAL 211 
 
 Legislation which is intolerant of all extremes, and 
 which makes an undiscriminating attack on every 
 divergence from the normal code, is apt to kill just 
 where it seeks to cure ; and when the liberties of the 
 citizen are protected against all possible infringement, 
 it may be found too late that no liberties are remaining 
 to protect. There is a telling satire on this type of 
 legislation in one of Mr. Chesterton's poems, which 
 describes the sufferings inflicted by the tribe of meddle- 
 some reformers upon an inoffensive citizen named 
 Jones. This Jones possessed a dog, which at first he 
 kept chained up in his back-yard ; but in so doing, he 
 unwittingly aroused the jealous zeal of the reformers. 
 First he was compelled to set the dog at liberty ; then, 
 because it barked at motor-cars, to part with it 
 altogether. Presently the police stepped in and finding 
 his yard inadequately guarded annexed that too. 
 Poor Jones was now detected in a new offence ; having 
 no yard for exercise (as by statute he was bound to do) 
 his health Was sadly undermined : and the medical 
 officer declaring that his legs were " atrophied from 
 long disuse," must needs amputate them both. Others, 
 with still more thorough-going and officious zeal, took 
 off his arms, and soon (out of sheer pity for such help- 
 lessness) his head. The rights of dog and motorist has 
 each in turn been vindicated ; the cause of public 
 security and public health had triumphed ; the passion 
 for reform was satisfied ; and Jones was left an 
 obtruncated corpse. The moral of this grotesque 
 allegory is plain. State interference may secure us 
 immunity from wrong, but it also deprives us of the 
 opportunity for right. To cut off the offending hand 
 or foot, is to go maimed through life ; and in the 
 anatomy of human character liberties are the means of 
 self-expression as the members are the agents of the 
 brain. So with every fresh restriction of our liberties, 
 it is as though a limb were lost. And the real danger 
 
212 NEW FALLACIES OF MIDAS 
 
 of Socialistic * legislation is precisely this, that, when the 
 State, repressing here, curtailing there, shall have 
 shaped the individual to the point of true perfection, 
 his virtues will have vanished with his vices, and he 
 will be found a thing, like Jones, without human 
 character or hunian powers. 
 
 Yet, just because human nature is vicious and unruly^ 
 and because without discipline there can be no civilised 
 existence, it follows that the State must interfere with 
 the relations of its subjects. Such interference however 
 may take two forms ; it may seek to limit liberties or 
 it may seek to destroy them. When, for example, the 
 use of alcohol tempts men to drunkenness, the State 
 may either restrict its use by visiting heavy penalties 
 upon excess, or alternatively it may prohibit brewing 
 and remove the temptation altogether. The Pro- 
 hibitionist will favour the one course, because he is 
 persuaded that the use of alcohol is Wholly bad ; his 
 opponent will favour the other because he holds that 
 alcohol is in itself a good, and bad only in its misuse ; 
 and upon the right choice between these opposing 
 views the wisdom of reform will depend. So when 
 human nature goes astray and needs the correction of 
 external discipline, this question must precede all 
 legislative interference. Have We here to deal with 
 something wholly wrong — a canker on human nature 
 which We must root out at whatever cost ? or with 
 something for which, if rightly used, human nature is 
 the better and the richer, and which therefore We must 
 if possible, retain ? Now there are some abuses which 
 fall beyond any doubt under the first of these two 
 heads. If the State sets an absolute veto upon duelling, 
 or upon the sale of harmful drugs, there will be no 
 apologists to uphold the right to kill, or to maintain 
 
 * Socialistic, whether of the Collectivist type or of the SyndicaHst 
 type known as Guild-Socialism : for in the latter , as we have seen, State- 
 ownership, and in some degree State-Control, are equally essential. 
 
THE RIGHTS OF THE INDIVIDUAL 213 
 
 that absinthe drunk in moderation is good for health. 
 On the other hand, we are no less agreed that certain 
 liberties are fundamentally good ; and these, even 
 while we are compelled to limit, we shall endeavour to 
 preserve. Such, for example, is the power of a parent 
 over his child. We believe the institution of the family 
 to be the central tie of human life and the source of 
 half our human virtues. Therefore we shall tamper 
 with its rights as little as may be. It may be that the 
 abuse of parental liberties will compel us to curtail 
 them ; we may forbid the father to chastise his son in 
 a brutal or even in an unreasonable manner ; we may 
 force him (often under circumstances of extreme 
 hardship) to send his son to school. But the respon- 
 sibility of a parent towards his child will still stand; 
 and that this responsibility, however liable to neglect or 
 to misuse, should be altogether done away, is for most 
 of us unthinkable. It is a permanent and inalienable 
 right, which every interference has not weakened ; 
 on the contrary, the limitations which we have 
 imposed upon that right, have given it a new and richer 
 value. The relations between parent and child are, 
 in fact, more sincere, more generous and more deep 
 to-day than in the old era of parental tyranny. For 
 limitation has not supplanted the privilege of family 
 life nor destroyed the liberty of love : and just as the 
 artist who submits to the constraints and conventions 
 of his craft, gains a beauty and a strength which 
 unrestricted licence cannot give, so under the discipline 
 of law, when rightly framed, ^\ e may find a stronger and 
 truer freedom than we yet have known. 
 
 (ii.) 
 
 Remembering, then, that it is easier to mar insti- 
 tutions than to make them, let us beware lest under 
 the present strong impulse of reform we should be 
 
214 NEW FALLACIES OF MIDAS 
 
 tempted to destroy where We cannot build, and sweep 
 away what we are powerless to replace. Standing as 
 we do upon the brink of far-reaching economic changes^ 
 we shail do well to take account not of the present only, 
 but of the future and the past ; and when rival theorists 
 summon us in the name of freedom to reform this 
 institution and to make an end of that, it behoves us to 
 look closely into human nature, and to enquire what 
 are the economic liberties which are fundamental in 
 man and robbed of which he could no longer be called 
 free. Such liberties, as I think, are two in number ; 
 and of these the first is the liberty of bargaining. 
 The power to accept an exchange or refuse it, the 
 power to offer or withhold at will his property, his 
 money and his labour, is the inalienable right of the 
 free man. Often, it is true, the State for its own 
 reasons may encroach upon that right. It may enforce 
 the sale of certain goods at a fixed price ; or it may 
 decree the payment of a certain wage in a particular 
 industry. Yet these infringements of individual 
 liberties are the exception rather than the rule ; and 
 even in such cases the State does no more than regulate 
 the conditions under which bargains shall be made ; 
 the bargain itself is not compulsory. The employer 
 need not pay the statutory wage if he prefers to let his 
 mills stand idle ; and the grocer who objects to selling 
 sugar at the Food Controller's price, is at least free to 
 give up his business. But suppose the State were to 
 address its subjects thus ; " I no longer say that 
 if you choose to perform such and such services for other 
 men, you shall perform under such and such conditions ; 
 but I say tliat these services have got to be performed ; 
 and perform them you shall (and at such conditions 
 as I please), whether you choose or not " ; then indeed 
 the individual would cease to be a free agent altogether 
 and the last semblance of economic liberty \\ould have 
 been lost. Such loss of liberty is, in fact, what Labour 
 
THE RIGHTS OF THE INDIVIDUAL 215 
 
 dreads as it dreads nothing else ; the very fear of it has 
 made industrial conscription for the purpose of war 
 impossible ; it ^\ recked the scheme of National Service 
 from the start ; and it has made the working classes 
 bitterly distrustful of every form of State-Control. 
 Yet such loss of liberty is none the less the very goal 
 to which Labour's own policies must inevitably lead. 
 Under Socialism and Guild Socialism alike, the State's 
 claim to fix the A\age of the producer must sooner or 
 later clash with the producer's liberty to vvithhold his 
 labour, whenever the wages do not please him ; and 
 when this clash occurs the State will have no choice but 
 to employ compulsion or (if it prefers) to abdicate its 
 claim. The power of the strike will either remain 
 effective, or else it will be suppressed by the authority 
 of law ; ana in the latter event the producer will have 
 lost his economic freedom. Nor, in the long run, can 
 the State hope to banish competition except with the 
 same result. There is only one means of making wages 
 independent of the law of supply and demand ; and 
 that is by depriving the individual of the liberty to 
 choose his trade. Let us suppose for instance that the 
 State assumes control over sea- transport. The carrying 
 trade is an absolute necessity of national existence ; 
 the need of export and import is permanent and 
 urgent ; and the remuneration therefore is less affected 
 than in more speculative trades, by the fluctuations of 
 the market. The State then may reasonably assess 
 the value of this service to the community and establish 
 with justice a permanent standard of remuneration. 
 As times goes on however, it may Well happen that 
 men will be less and less attracted towards the 
 mercantile marine. In comparison with the security 
 and comfort of rival occupations, the dangers and 
 hardships of a life at sea will appear to them distasteful. 
 The flow of recruits will cease ; and the State will 
 once more be faced with this ailemma ; either it must 
 
 15 
 
2i6 NEW FALLACIES OF MIDAS 
 
 tempt them with a higher wage and so admit the 
 individual's liberty of bargaining or once again it must 
 fall back upon compulsion and revive the press-gang 
 in a novel form. There is no third alternative. Either 
 the individual is free or he is not free ; and no system 
 ever inventea can make the State his economic master 
 and yet leave him other than an economic slave. 
 
 The second liberty of the individual, is the liberty to 
 save. Not even the State can compel a man to con- 
 sume against his will ; and it is clear that, if he con- 
 sumes less than he produces he will have a surplus in 
 reserve. Unless this is forcibly taken from him, he 
 may use it either for investment (that is, he may entrust 
 it as a loan to someone else in return for certain pay- 
 ments) or while living upon the surplus, he may turn 
 his hand to producing something else and enlarge 
 his profits in that way. In either case, he will possess 
 Capital and reap the advantage of Capital's reward. 
 Now, under Socialism and Syndicalism, as we have 
 seen, it is proposed that all Capital should be taken out 
 of the hands of the individual, and be vested in the 
 Unions or the State. In other words, individual 
 saving will be replaced by collective saving ; and, just 
 as the directors of a company put by a portion of their 
 annual profits for the future aevelopment of the 
 business, so by the State's or Guild's economy fresh 
 additions would be made to the collective capital, in 
 which addition the several members would each possess 
 some stake. Such a scheme is practicable enough ; 
 and here at any rate we need not question its power 
 to develop industry wisely and to secure a progressive 
 increase of production. But in any case it could 
 hardly preclude the individual's right of saving 
 privately on his own account. The thrifty man, 
 earning a good salary or wage, would still be able to 
 put by a handsome surplus for investment ; and 
 indeed for the father of a growing family such provision 
 
THE RIGHTS OF THE INDIVIDUAL 217 
 
 for the future would be a necessity rather than a right* 
 Even if the privileges of private capital [were enor- 
 mously curtailed, they could not be altogether 
 destroyed, except by the sacrifice of the individual's 
 freedom ; and, seeing how great is the power of 
 capital, how swift to accumulate and to gather 
 strength at every stride, we may be sure that nothing 
 short of the most arbitrary restrictions could hold the 
 capitalist in check. Somewhere there would be found 
 a fresh outlet for his enterprise, and therein fresh 
 means to profit by his resources. So long as man is 
 free to save and free to bargain (as every man of 
 character would wish to be) Socalism and even Syndi- 
 calism must both prove broken reeds in the reformer's 
 hand ; for in each case the time will surely come when 
 he must either surrender his doctrine of the State's 
 supremacy or else his faith in the liberty of man. 
 
 The truth is that the Collectivist's ideal cannot be 
 logically consistent without denying the premises on 
 which democracy depends ; for like the IndividuaHst's 
 ideal it is based upon a fallacy. To the men of the 
 Manchester School the economic unit was the indi- 
 vidual man, his duties wholly self-regarding, his 
 interests everywhere opposed to the interests cf others, 
 and his creed to leave the public good to take care of 
 itself and to tolerate no interference from the State. 
 To the CoUectivist on the other hand, the economic 
 unit is the general will as embodied in the State ; and 
 (if his theories are pressed to their conclusion) his State 
 would take no more account of the individual than the 
 Individualist would take account of the State. The 
 community would be everything ; the single citizen 
 no better than the slave of its will ; and wherever public 
 and private interests clash, the latter would go to the 
 wall. Now this view of the CoUectivist is, like the 
 other, founded upon an unreal abstraction. The 
 individual, independent of his fellows, and unaffected 
 
2i8 NEW FALLACIES OF MIDAS 
 
 by their needs, is a pure fiction ; the State which uses 
 its citizens as mere pawns, is equally an inhuman 
 monster. The true economic unit is neither the 
 individual nor the State, but the harmony between 
 them both. And there is but one way and one way 
 only (as our political development has long since taught 
 us) whereby true and lasting harmony can be attained. 
 It is not through some cut and dried system of arbi- 
 trary control, which ignores the individual's liberties 
 and moulds him to a mechanical obedience ; it is rather 
 through the education of an elastic discipline, which, 
 while it punishes the abuse of liberties, yet seeks to 
 inculcate their proper use, and which instead of com- 
 pelling the slavish acceptance of a dull conformity, 
 would awaken the quickening spirit of spontaneous 
 service. For while the harmony which depends upon 
 compulsion is like the harmony of the beehive or the 
 ant-heap, efficient perhaps, but static and unpro- 
 gressive ; the harmony of free service is living and 
 creative. Nothing but the individual will can be the 
 ultimate source of all vitality ; even in the animal 
 world it is the rare divergence from the normal type 
 that creates a new species ; and among men the 
 strongest and wisest lead the way. So it is upon the 
 free development of individuals that the vitality and 
 progress ot the State must in the last resort depend. 
 Though the whole is greater than the parts, yet if the 
 parts be rotten, the whole also will surely die. 
 
 (iii.) 
 
 Every sane man values liberty in himself ; he 
 deprecates it only in others. To save and withal to 
 profit by his saving, is his desire, if not his practice ; 
 and even the poorest workman would doubtless turn 
 capitalist — if he could. But of this he sees no present 
 and indeed no future prospect. Others, whether by 
 luck or skill, have drawn the big prizes in the lottery 
 
THE RIGHTS OF THE INDIVIDUAL 219 
 
 of life ; and he, like the disappointed gambler, rebels 
 against his fate and questions even the justice of the 
 rules . So it is not strange that he should lend a ready 
 ear to the facile remedies of theorists, telling him that 
 all the profits should be pooled, the cards re-dealt, and 
 the game played out afresh on the lines of a more 
 equitable partition. Liberty is all very fine in theory ; 
 but it has not suppHed him with food to eat and clothes 
 to wear. And though the new system may lack the 
 spice of adventure of the old, at least it will pay him 
 better. If indeed, Socialism means higher wages, 
 greater comfort and less work, its moral disadvantages 
 may (so the poor man thinks) be easily discounted. 
 
 Upon one point of plain arithmetic the ideas of the 
 Socialist, the Christian and the thief meet in a strange 
 conjunction. All three are agreed that to make the 
 poor man richer we must make the rich man poorer ; 
 and although they are not at one about the means of 
 doing it, that is no reason to dispute the accuracy 
 of their calculation. No special pleading of the 
 Socialist s opponents will alter the obvious fact that 
 the poor would benefit handsomely by a redistribution 
 of the national wealth. Before the war, at any rate, 
 the average income of the working man lay somewhere 
 between £60 and £70 a year, and, if by some miracle, 
 the national income should be divided up and dis- 
 tributed in equal parts among all adult bread- 
 winners, then that average would be increased by 
 approximately one half. So sweeping a reform however 
 is hardly to be contemplated by even the wildest of 
 fanatics. The object of the Socialist's attack is not 
 so much the man of moderate means, the small 
 capitalist, the professional man, the tenant-farmer 
 or the well paid artisan ; it is directed rather against 
 the super-wealthy, the individuals who possess an 
 income of (let us say) £5,000 or over. If their goods 
 could be " divided and given to the poor," he would 
 
220 NEW FALLACIES OF MIDAS 
 
 feel that justice had been done In point of fact, the 
 net result of such a deal would be to raise the average 
 by some ten pounds a head — an increase of one sixth, 
 a welcome windfall it may be, but hardly a signal 
 triumph for the Socialist cause. To take an alter- 
 native suggestion, let us suppose the transference of 
 wealth to follow the line of the Syndicalist programme ; 
 in that case the results would be a trifle better for the 
 workers. Of the gross profits of industrial out-put it 
 has been reckoned that the capitalist's share is 
 seventeen per cent., the workers sixty-six, the balance 
 going to the salaried staff or to upkeep and repairs. 
 If, therefore, the capitalist's share were handed over 
 to the workers, it would mean the addition of not one 
 sixth, but one quarter to their income. This, too, is 
 an addition not to be despised ; and in these figures 
 there is enough perhaps to prove that such radical 
 reform is indeed one way to make the poor man richer. 
 That it is the only Way, however, is patently untrue ; 
 that it is even the best or quickest way is very doubtful. 
 For it is equally possible that capitalist and workman 
 should both grow rich together. Such has in fact 
 been the experience of the past. During the nineteenth 
 century, the wealth of the nation grew prodigiously, 
 and no doubt large fortunes were made by individuals ; 
 but it is beyond question that a very large share of that 
 increase went to the workers. Whereas the average 
 of rich men's incomes (incomes, that is, of £5,000 a year 
 and over) was augmented by roughly one third,* 
 the income of the adult worker was more than doubled 
 between 1801 and 1910 ; and though for such progress 
 no special thanks are due to the individual master who 
 was seldom a willing party to this rise of wages, never- 
 theless some credit must be given to the capitalist 
 
 * It must however in fairness be observed that, the number of 
 " rich " men has increased roughly tenfold, whereas the working 
 population has only been quadrupled. 
 
THE RIGHTS OF THE INDIVIDUAL 221 
 
 system as a whole ; for without that system such 
 progress would scarcely have been possible at all. It 
 was the enterprise, the courage, the foresight and ( if you 
 will) the greed of the big manufacturers and merchants 
 that gave the needful impetus to trade, initiated 
 hazardous experiments, perfected new devices, and 
 so brought about that niiraculous increase of produc- 
 tion of which the workers are reaping the benefit to-day. 
 Did we stand once more on the threshold of the Indus- 
 trial Revolution, and see clearly before us all the gain and 
 loss of unrestricted competition, wh^ would dare assert 
 that any alternative system could produce equally good 
 results ? And, looking forward into the future, what 
 assurance can we have that, if our policy were to 
 be reversed to-morrow, the same rate of progress would 
 continue as in the past ? The wise traveller, when he 
 sights a pool of water across the desert sands, does not 
 empty his flask dry until he has good proof that his 
 hopes are based on no illusion ; and before we can 
 safely dispense with capitalist control, we too, must 
 have definite proof of the efficiency of its successor. 
 We must be sure that the collective intelligence and 
 purpose of the masses, will be equal to their task. Will 
 they, in other words, be able to repeat or even to 
 improve upon the capitalist achievement ? Is there 
 real reason to predict that a hundred years hence the 
 average member of the Socialist community would be 
 twice as rich or more than twice as rich as the 
 average worker of to-day ? 
 
 Before we can give an answer to these questions and 
 decide whether industry under popular control would 
 be as effective as under capitalist control, we must, 
 I think, consider the problem under three aspects, ; 
 first, what will be the effect of this change on the pro- 
 duction of wealth, second upon the saving of wealth, 
 (that is on capital,) and last, upon the use of wealth when 
 it is saved. 
 
222 NEW FALLACIES OF MIDAS 
 
 (i) It is commonly asserted that with the disappear- 
 ance of free competition, the chief incentive to energy 
 would have been lost ; and that is tantamount to 
 saying that men are incapable of giving their best work 
 except for the purely selfish ends of private profit. 
 Now it is doubtless true that much of the enterprise by 
 which trade and manufacture have been developed, 
 has been due to the money-making instincts of 
 private individuals. The pioneers of the last century 
 were men who both owned and controlled their 
 businesses and who therefore profited directly by the 
 success of their own management. But since then 
 circumstances have somewhat changed ; it is more 
 common nowadays to find businesses controlled by 
 salaried managers who have only an indirect interest 
 in the profits of the concern ; nor is there any good 
 reason to suppose that their Work is less efficient than 
 the Work of the owner managers or that their policy 
 is less progressive. In any case, three quarters of the 
 population work upon fixed salaries or wages, nor have 
 they ever worked on any other terms ; and it is rating 
 human nature unnecessarily low to suppose that the 
 men at the top have a different conception of their 
 duties from the men at the bottom. Nor, after all, 
 will all stimulus to energy and zeal be removed by 
 Socialism. In the first place services will be still 
 rewarded in proportion to their worth ; and there will 
 still be a hierarchy of functions and good work will 
 still earn the reward of merited promotion. Secondly, 
 we must not forget that good work will always directly 
 or indirectly mean the worker's gain, even though that 
 gain be shared by others. We have abundant proof 
 already that a workman will work better, when he 
 knows that the whole shop will profit by his industry, 
 and himself along with other members of the shop. 
 And, in this respect, Syndicalism possesses one manifest 
 advantage over the Socialistic system. Where each 
 
THE RIGHTS OF THE INDIVIDUAL 223 
 
 individual is the servant of the State, we may hope 
 indeed that he will feel the call of patriotic duty and 
 put forth his best efforts to benefit the community at 
 large. But human imagination is not strong. So 
 large a unit as the State is too vague and too elusive 
 to appeal to every man. He will never see perhaps the 
 tangible results of his endeavours ; his share in the 
 general scheme is too minute to excite his ambition or 
 his pride. But make the economic unit smaller ; 
 share out the profits among the members of a Guild or 
 still better of a workshop ; and the case will be very 
 different. Then at once a certain esprit de corps will 
 be aroused ; the healthy influence of public opinion 
 will supply a stimulus which will be felt by managers 
 and men alike ; and even the loss of competition will 
 not be noticed, if the spirit of co-operation takes its 
 place. In short, so far as efficiency and effort are 
 concerned, industry might well pass from indi- 
 vidualist to syndicate control, and still survive the 
 shock. 
 
 (2) Over the second point, however, we are at once 
 upon more questionable ground. It is clear that the 
 vigorous production of wealth is not alone sufficient for 
 progress ; there must also be conservation of wealth, 
 or industry will remain at a standstill. Now though 
 men may be ready to work their best for the common 
 cause, it is much more doubtful whether they will 
 be prepared to save for it. Economy of public funds 
 has never been an easy or common virtue. From 
 the minister who squanders the resources of the State, 
 down to the man who wastes the writing-paper at his 
 club, it is the same unvarying tale. What is every- 
 body's business is the business of no one in particular ; 
 and while we are careful of the private penny. We are 
 carelessly indifferent of the public pound ; and if proof 
 of this were needed, the record of municipal finance is 
 enough to show how little the average citizen is 
 
224 NEW FALLACIES OF MIDAS 
 
 interested in collective economy. To make matters 
 worse, thrift is not the natural instinct of our people ; 
 they are far from being a saving nation like the French ; 
 and we cannot expect them suddenly to develop in the 
 management of public funds, a virtue which they do 
 not practise in their homes. It is true of course that 
 they have little opportunity of thrift ; but when the 
 opportunity does occur (as it occurred to many during 
 the war) it is not used. Still less is that greatest of 
 economies, wise expenditure, properly understood. 
 The reason why so many shoddy tenements are built 
 at the present day, is partly at least because the 
 working man prefers the advantages of cheapness to 
 the superior comforts of a well-constructed home ; 
 and if, after the war, our suburbs are filled with rows 
 and rows of ugly unsubstantial houses, it will not be 
 because the Board of Trade is lacking in ideals, but 
 because Labour sets so little value upon either per- 
 manence or beauty that it will grudge to add one 
 unnecessary sixpence to the rent. Again, the wisest 
 investment that a man can ever make is the sound 
 education of his children, yet if the law permitted it, how 
 many parents would gladly cut the years of schooling 
 short for the sake of some trifling addition to the 
 family's Weekly income. In short, it is not at all easy 
 to believe that there exists among the majority 
 of men sufficient self-restraint or commonsense to 
 ensure a progressive increase of our industrial 
 resources, should the control of industry ever pass 
 into their hands. When the annual budget was sub- 
 mitted to their decision, high wages would be more 
 popular than wise retrenchment ; the promise of 
 speedy returns would catch more votes than the slower 
 programme of improved production, and in the 
 financial schemes of a democracy there Would be 
 little of the deliberate patience and farsighted cal- 
 culations of the independent capitalist. It seems 
 
THE RIGHTS OF THE INDIVIDUAL 225 
 
 moreover that from the very circumstances of the 
 case their temptations to extravagant expenditure 
 will in a sense be greater than are his. The private 
 individual who receives an income of a hundred 
 thousand pounds, can hardly spend the whole. It is 
 almost a foregone conclusion that three quarters of it 
 will at the very least be saved, and so will serve in its 
 turn to capitalise fresh output, by which We must 
 remember others will benefit as well as he. So the 
 great financier acts, as it Were, as the repository of the 
 nation's wealth, or at least as a brake upon the national 
 expenditure. If; on the other hand, that hundred 
 thousand pounds were distributed among a hundred 
 thousajid persons, the result would probably be very 
 different ; for the temptation of spending it Would be 
 increased a hundred thousand fold. Wealth may be 
 likened to water which, if gathered in a lake or hollow 
 can be saved for further uses, but which, if it descends 
 upon the ground in innumerable rain drops, is rapidly 
 absorbed and drained away. It may indeed be argued 
 that as rain is necessary to feed the ground and fertilise 
 the crops, so in the same manner, increased con- 
 sumption may raise the standard of living, stimulate 
 the people's energies, give an impetus to trade, and 
 thus in the end bear fruit in an increased production. 
 But the central reservoir is also needed, that is if we 
 are to improve on nature and irrigate our lands. So 
 the capitalist too may have his function ; he too may 
 be necessary to the proper improvement and develop- 
 ment of our national resources. And if we were once 
 to break the dam which holds these gathered Waters, 
 can We be sure of the result ? No doubt a temporary 
 relief would be felt in the parched and sterile places ; 
 may be the immediate harvest Would be the richest ever 
 known. But who can say whether in the uncertain 
 future, the scattered waters could ever be regathered 
 or the broken dam rebuilt ? It seems more than 
 
226 NEW FALLACIES OF MIDAS 
 
 doubtful whether now or for many years to come 
 democracy could be trusted to regulate its own con- 
 sumption wisely or build up its own capital with a sure 
 and steady growth ; and without a steady growth of 
 capital there can most certainly be no permanent 
 advance towards the goal of material happiness. 
 
 (3) There is a third factor which must play an 
 important part in industrial progress ; I mean the 
 use and investment of capital, and how this would fare 
 under a system of popular control falls next to be 
 considered. Now there are many qualities which go 
 to make the good financier; not the least perhaps is 
 courage. He must be ready to sink his money in some 
 new scheme of which he cannot foresee the certain issue 
 except with the eye of faith ; he must be ready to take 
 risks ; and something of the eager instinct for adventure 
 is needed in his composition. However when We come 
 to ask how far we might count upon the same qualities 
 of enterprise and courage in the policy of the Socialistic 
 state or Syndicalist society, it may seem at first 
 sight as though they will not be needed. By the very 
 act of pooling our resources, we should to some extent 
 eliminate the element of risk. The losses of an 
 unsuccessful venture would be so widely spread that 
 they would scarcely be felt by the individual member 
 of the community ; and it may be thought that the 
 State could embark light-heartedly upon schemes from 
 which the most daring capitalist would shrink. Yet 
 after all, can We be certain that it would ? Grown 
 citizens do not gamble for ha'pence. It is only the 
 investor who is out to get exceptional returns, that is 
 willing to take exceptional risks. And we must 
 remember that under the collectivist system this 
 particular incentive will be gone ; there could be no 
 more playing for high stakes. For, if the individual's 
 share of risk is diminished, it is clear that his share of 
 profit will be diminished also ; and a speculation which 
 
THE RIGHTS OF THE INDIVIDUAL 227 
 
 appeals to the adventurous when it offers the prospect 
 of a twenty per cent, return, must seem less tempting 
 when it means no more than the difference between four 
 per cent, and five. The instinct for adventure would 
 hardly be encouraged by the Socialistic state; least of 
 all is it likely to be found in the salaried officials who 
 will for the most part direct financial policies. For as 
 We have seen above, the official is not like the capitalist 
 his own master. He has none of the capitalist's 
 inducement to adventure. He will not make any 
 personal profit out of a speculative deal, and he dreads 
 the odium of possible failure more than he values the 
 applause of possible success. Neither is he likely to 
 initiate nor is the jealous body that controls him likely 
 to approve any sudden or bold departures from the 
 beaten track. Democracies are naturally suspicious 
 of their servants, quick to visit punishment upon those 
 who blunder, slow to encourage originality and 
 imagination ; and if the industrial pioneer is to have 
 free rein for his genius he must be hampered neither 
 by the red tape of officialdom nor by the burden of 
 responsibility to others. This is not indeed to say that 
 the spirit of adventure will be equally needed in every 
 branch of industry or in every department of com- 
 merce. There are some kinds of production which 
 involve little element of risk. When the demand for 
 a thing is constant, and the supply of it regular and 
 secure, the producer's task is straight-forward enough ; 
 there is little call for startling innovations. The 
 transport service is a case in point. We can calculate 
 precisely what train-service will be needed in the 
 various parts of the country ; and no special enterprise 
 is wanted to supply those needs. Competition in 
 supplying them will in the long run be extravagant and 
 costly ; and a public system of control (if placed in 
 reasonably skilful and energetic hands) would mean 
 better organisation and substantial economies. There 
 
228 NEW FALLACIES OF MIDAS 
 
 is therefore much to be said for the nationalisation of 
 these natural monopolies, in which demand and supply 
 are as constant and invariable factors as in the case of 
 light or water. 
 
 Where, on the other hand, a considerable element of 
 risk is attached either to the demand or the supply, 
 State control will not so easily discharge the part which 
 is now played by private competition. The exploita- 
 tion of an oil well, for example, is in a large degree 
 speculative ; the probable yield is uncertain ; the 
 cost of production is uncertain also ; and nothing but 
 the equally uncertain chance of big returns may induce 
 men to make the venture. Again, the requirements of 
 the consumer are changeable and by no means easy 
 to predict. The manufacturer cannot estimate in 
 advance the value of some novel luxury or some new 
 invention. It may take the public fancy ; or it may 
 prove a complete fiasco. Often the demand for a thing 
 is not felt at all, until the supply is there to create it. 
 Even our military chiefs had not conceived of half the 
 uses of the aeroplane until the enterprise of private 
 inventors had revealed its possibilities, and just as it 
 required the strong stimulus of war to arouse in them 
 the spirit of invention, so without the stimulus of 
 competition there Would be little to disturb the con- 
 servative habits of the producer or to break him from 
 his settled methods of production. Competition is 
 after all the sovereign remedy against stagnation, and 
 so whereas the Socialist official falling complacently 
 into the groove of dull routine, would be content to 
 supply the obvious needs of the consumer and no more, 
 the competitive trader, eagerly intent upon new profits 
 may lead and educate the public taste by tentative 
 experiments and bold improvisations. In short, it is 
 by the imagination and enterprise of the few rather 
 than by the conscious demand of the many that fresh 
 conveniences are added to our life land civilisation 
 
THE RIGHTS OF THE INDIVIDUAL 229 
 
 forges patiently ahead. Were we forced to wait for 
 innovations and improvements until the general public 
 is aware that they are wanted, we might very well 
 wait till Doomsday ; but. if we allow the capitalist 
 his chance and give him a fair iield for bold initiative 
 and reasonable profit then all the wealth of human 
 ingenuity will be at our disposal and we shall not be 
 kept waiting long. 
 
 We have now considered under three different aspects 
 the fitness or ability of the people to undertake the 
 control of industry and to fulfil the function of the 
 dispossessed capitalist. Of its very nature, all fore- 
 cast of the future must be guess-work ; but so far 
 as past experience can prove anything, it seems that 
 upon two of those counts at least the people would be 
 found wanting. Under the Socialistic State we may 
 hope (though we cannot be certain) that a sense of 
 duty and loyalty to the common cause would supply 
 the stimulus to energy and zeal which is now supplied 
 by private profit ; but for that difficult combination 
 of audacity and self-restraint which has been the 
 mainspring of our past industrial progress, we have 
 found no substitute. These are qualities which 
 legislation and organisation alone are powerless to 
 produce. It requires a particular environment of 
 economic conditions to bring them out, just as much 
 as it requires a particular environment of physical 
 conditions to develop the craftiness of the tiger or the 
 docility of the cow. Education may do something ; 
 but education of the class-room is not in itself enough. 
 It is only in the hard school of life that these lessons can 
 be learnt. True thrift is taught not by compulsory 
 economy ; but by the painful discipline of personal 
 experience. A man begins to value the importance of 
 doing right, only when he has seen or tasted the con- 
 sequences of doing wrong. Indi\idual virtues are the 
 outcome of individual responsibility ; and however 
 
230 NEW FALLACIES OF MIDAS 
 
 comfortable and secure the socialistic life might be, 
 we know that responsibility is not to be learnt by a 
 servile dependence on the State. 
 
 For picture what kind of life strict Socialism would 
 offer. From the beginning to the end of a man's 
 career his path will be made easy and secure. Employ- 
 ment will be certain ; and (if Socialism can make 
 good its claim) a decent standard of remuneration 
 will be certain also. He will not need to make pro- 
 vision against accident or sickness ; the State will 
 see to that. He will not need to put by against old 
 age ; a pension will be assured to him. He will not 
 need to start his son in life ; the public service will 
 claim them as it has claimed himself, and will allocate 
 them to their proper stations. There will be no 
 demands upon his charity ; for the sick and needy 
 will have passed under the protection of the State. 
 In a hundred ways the chances and accidents of life 
 will be automatically countered ; and this not by his 
 own forethought and discretion, but by a paternal 
 authority, which will shelter him even from the con- 
 sequences of his own weakness and mistakes. I do not 
 say that such a life will not be happy and comfortable 
 and contented ; but I do say that it will be no natural 
 or effective training ground for the virtues of self- 
 reliance and self-control. The normal responsibilities 
 of man will be lacking in it ; for responsibility means 
 liberty, liberty to do wrong as well as to do right, to 
 fail as well as to succeed. No doubt such liberty is 
 dangerous both to a man's own self and to his neigh- 
 bours ; but liberty is always dangerous ; in religion, 
 in marriage, in all the best things of life, the man, who 
 is free to choose, runs recklessly into risks which should 
 appal him, and before which he might well hesitate to 
 trust his own liberty of choice. Yet he would be less 
 than a man who on that account would shrink from the 
 responsibility of choosing. For it is by accepting 
 
THE RIGHTS OF THE INDIVIDUAL 231 
 
 risks that character is made. The man who goes on 
 guiding strings through life, will surely be found 
 wanting when the big test comes, and he must stand 
 perhaps alone. The Spartan, well drilled and moulded 
 as he was in the iron discipline of Lycurgus, often broke 
 out into licence and debauch when he found himself 
 abroad and beyond the reach of the State's controlling 
 hand. From the behaviour of Germans in our own 
 day the same moral may be drawn. There is no easy 
 road to Virtue ; and if the State attempts to man-" 
 facture what can only come by natural growth, it will 
 one day find that the law-made virtues on which it 
 counted have failed it at its need. 
 
 (iv.) 
 
 If, then, this analysis be true, Socialism stands 
 doubly condemned. Whether regarded as a moral 
 education or solely as a business proposition, it is alike 
 found wanting. It removes the natural incentive 
 to enterprise and thrift ; and yet puts nothing in its 
 place. It destroys the economic liberty of the 
 individual ; and yet offers no security of progress to 
 the community as a whole. If we were sure that by 
 forfeiting our freedom to save and bargain we should 
 indeed bring the millenium nearer, the sacrifice might 
 perhaps be worth our while. But if Socialism, while 
 bringing us a temporary advantage, were to end in 
 ultimate stagnation, then we should repent at leisure 
 of our premature impatience ; for, like the Arab who 
 has killed his camel to extract the water from its carcase, 
 we should find ourselves satisfied indeed for the instant, 
 but no longer capable of travelling to our journey's end. 
 And is it in truth so very strange if this instinct for 
 economic liberty should prove after all to be the basis 
 of material progress ? Even the abstract laws of 
 conscience and religion have also their utilitarian 
 
 18 
 
232 NEW FALLACIES OF MIDAS 
 
 application. There is a sound hygienic principle 
 underlying the observance of a weekly sabbath ; honesty 
 is a paying policy as well as a moral duty ; and with 
 the acceptance of the Christian code of ethics life has 
 become more tolerable, not less. So if the normal 
 human being feels (as beyond doubt he does) a genuine 
 desire to be master of his economic fate, not that he 
 may use his freedom to the detriment of others, but 
 that through his freedom he may realise his own 
 ambitions, shape his own course through life, and find 
 for himself the road to happiness, then we may be sure 
 that this instinct is a sound and even a necessary 
 impulse, and that obedience to its call will tend no less 
 to his material welfare than to his moral good. Even 
 were it otherwise, and if it were necessary to make a 
 choice between the two, we cannot in reason doubt 
 what our choice would be. The individual character 
 is of more account than the prosperity of nations ; 
 and to gain all that the world can offer of comfort and 
 security is no sufficient compensation for the loss of 
 what ennobles man. If the truest ideal of individual 
 life is the sacrifice of self, yet that sacrifice to be sacrifice 
 at all, must spring from the individual's own free will. 
 Human nature can only rise to its full height, when 
 a man accepts this responsibility of freedom and uses 
 it humbly in the service of his fellows. To refuse that 
 responsibility is to shrink from the challenge of life, 
 and to leave human nature stunted and curtailed, 
 and the greater the responsibility accepted, by so much 
 the more will the reward be great. At the entrance of 
 the Needle's Eye, there is more virtue in the humility 
 of the kneeling camel than in the erect posture of some 
 lesser beast. 
 
THE RIGHTS OF THE INDIVIDUAL 233 
 
 NOTE ON THE RATE OF INCREASE OF 
 AVERAGE INCOMES UNDER THE CAPITALIST 
 
 SYSTEM. 
 
 Some striking figures have been compiled by Mr. 
 Mailock, which give us the opportunity of testing the 
 true value and effect of redistribution upon socialist 
 lines. 
 
 Mr. Mallock takes first an estimate of the ideul 
 average of income per head, supposing the total 
 wealth of the country to be equally divided. Next he 
 takes the average income per head actually enjoyed 
 by the poor (the class that is supported upon wages of 
 £160 per year and under). 
 
 Putting the two estimates side by side, Mr. 
 Mallock arrives at the following result. 
 
 A B 
 
 Average income, if the Average income of 
 
 nation's wealth were individuals supported on less 
 equally divided. than £i6o per annum. 
 
 180I £20 -^ __^ £14 
 
 1850 £24 ___^> £17 
 
 1880 £35 -~- mr:^ £^4 
 
 1 910 £45 ^ £34 
 
 Thus it will be seen that the '' ideal income " which 
 a complete redistribution of wealth would offer, is 
 reached by even the poorer class in a period varying 
 from thirty to forty years. If Socialism failed to ensure 
 a continuation of this normal rate of progress, the poor 
 man would actually be a loser, not a gainer by the 
 deal. In the future moreover we may expect with 
 reasonable confidence a considerable acceleration of 
 this rate of progress. It would not be at all surprising 
 if, all going well and the population remaining station- 
 ary, the average income were doubled in the next 
 thirty years. 
 
Chapter XVII 
 COMPROMISE 
 
 If we conclude (as I think we must) that the old 
 economic order will survive the shock of the Socialist's 
 attack, and if much of the world's capital continues in 
 the future, as in the past, to rest in private hands, it 
 does not follow that the capitalist's supremacy will 
 remain altogether unimpaired. One way or another 
 there are sure to be limitations of his power. Taxation 
 for instance will certainly divert a larger proportion of 
 his income into the public purse. His privilege 
 (already much curtailed) of handing down his wealth 
 intact to whomsoever he pleases, will probably be 
 curtailed still further. But, if the capitalist is wise, 
 the chief limitations of his power will be voluntarily 
 accepted and self-imposed. Such saciifice (if made 
 in the right spirit) will be an act of social justice and 
 good citizenship rather than the grudging concessions 
 of a threatened despot. If the workers claim a share 
 in the responsibilities and profits of industry the 
 capitalist will acquiesce not so much because he fears 
 the consequences of refusal, but because he recognises 
 the justice of their claim. His chcice, in short, will 
 be determined not by necessity, but by reason. Nor 
 need We doubt that the worker upon his part will be 
 ready to listen to reason also. For at bottom the 
 normal British working-man is as reasonable as any- 
 
 234 
 
COMPROMISE 235 
 
 body else. He has a large fund of instincti\ e common- 
 sense ; intensely conservative in his habits, seldom 
 for long the dupe of passion or illusion, and possessing 
 a shrewd grasp of practical issues, he has no great liking 
 for political chimeras. His speech, it is true, often 
 belies his instincts ; for, though his grievances are 
 real enough, he is a poor hand at expressing them in 
 words ; and if he often takes a grim pleasure in the 
 over-statement of his wrongs, and in applauding .the 
 exaggerated claims of revolutionary enthusiasts, that 
 is a common failing of mob psychology. His true 
 grievance is simply this ; that he is not treated as a 
 responsible being. Given a job to do, he is not con- 
 sulted how it should be done ; asked to work overtime 
 or to make a special effort, he gets no thanks ; and if 
 he does his work well and thereby improves or 
 accelerates the output, he does not touch a penny of 
 the extra profit. In a word, he is used as a tool or a 
 thing, and not as a man with a will and a soul of his 
 own. And all the while he knows that business might 
 be conducted upon different lines ; he knows that, 
 were he given responsibility he could justify the trust. 
 He knows that industry might be again what once it 
 was, a partnership between the master and the man. 
 If then he thought that the capitalist were willing to 
 acknowledge that partnership, we should hear no more 
 talk of sweeping the capitalist away. For the working 
 man knows well enough that the capitalist understands 
 the management of industry and that he himself does 
 not. And to the capitalist he will readily leave it if 
 the capitalist will allow to him| also his due share of 
 responsibility and trust. For there is one special 
 part of industry which every working man does 
 understand, and that is his own part ; and if over that 
 part at least he were given a limited control, he would 
 perform it well content. For while his reason tells him 
 that brains and hands have each their separate function. 
 
236 NEW FALLACIES OF MIDAS 
 
 it also tells him that neither has the right to tyrannise 
 over the other. If both parties are reasonable, com- 
 promise can never be far off, for compromise is the 
 triumph of reason ; and the first step towards industrial 
 unity is to understand. More than half the bitterness 
 and friction that exists between the men and the 
 masters comes from an inability to appreciate each 
 other's point of view. Misunderstandings often arise 
 from the most trivial causes. Because an employer 
 has not the leisure to mix among his men, because he 
 fails to show some sympathy where sympathy is 
 needed, perhaps even because he neglects to recognise 
 his employees in the street, they are up in arms against 
 him and interpret his conduct as churlish indifference. 
 The employer in his turn, conscious of the changed 
 feeling, but ignorant of its cause, sets all down to 
 insubordination and unreasoning discontent ; so 
 instead of conciliating he endeavours to repress ; bent 
 upon upholding his authority he will not listen to 
 reason ; the workers' demands, however, just will be 
 denied a hearing ; suspected ringleaders will be dis- 
 missed ; and thus the temper on both sides grows 
 gradually harder. When, in this tainted atmosphere 
 of suspicion and distrust, more serious disputes and 
 differences arise, the natural consequences will follow ; 
 immoderate claims on one hand, stubborn opposition 
 on the other, and too often, in the issue, charges of 
 broken faith on both. So the breach widens and before 
 it can be healed, there must be a new spirit and a 
 changed temper on both sides. Yet to despair of such 
 a change would be to lose faith in the English character. 
 There have been bitter feuds and sharp antagonisms 
 enough in the history of our national development. 
 But the same reasonable spirit which served in the past 
 to reconcile the causes of Protestant and Catholic, 
 landlord and peasant. Round-head and Royalist, 
 Tory and Democrat, has never failed us yet ; nor will 
 
COMPROMISE 237 
 
 it fail us now ; and even if we seeni to be drifting 
 heedlessly towards a critical impasse, that has always 
 been the English way ; and it is none the less certain 
 that, before it is too late, our traditional genius for 
 compromise will awaken and carry us safely through. 
 
 (ii.) 
 
 We have endeavoured hitherto to trace the course of 
 the industrial conflict and to understand the issues 
 upon which that conflict turns. Can we now foretell 
 the probable solution or guess what form the com- 
 promise will take ? Such prophecy cannot be easy. 
 There are three rival claims to reconcile, the capitalist's, 
 the worker's, and the State's ; and the relative strength 
 of these three rivals depends upon the chances of an 
 uncertain future. From year to year the balance of 
 power is shifting ; and the economic forces which 
 control it defy strict calculation. Still less can we 
 foresee under what circumstances and in what temper 
 the disputants will meet to negotiate the peace, we 
 cannot tell whether the terms will be dictated by the 
 triumph of the strongest or whether the settlement 
 will come through mutual concession and forbearance. 
 Nevertheless, having regard to the abstract justice of 
 the three rival claims, we can at least hazard an outline 
 picture of the ideal compromise ; and in such a com- 
 promise the theories of Socialist, Individualist and 
 Syndicalist alike will each claim some share ; for 
 each, as we have seen, contains some measure of the 
 truth. The Socialist rightly asserts the paramount 
 interest of the community in the regulation of 
 supplies ; therefore we shall recognise the State's 
 authority to exercise a supervisory control over the 
 entire business of production and consumption. The 
 Individualist asserts the liberty of every citizen both to 
 bargain and to save ; therefore (within the limits which 
 
238 NEW FALLACIES OF MIDAS 
 
 the State permits) we shall allow to the capitalist 
 liberty in the disposition of his savings, and to the 
 worker liberty in the use of his bargaining power. The 
 Syndicalist asserts the claim of every producer to share 
 the responsibilities and profits of production ; there- 
 fore we shall allow to capitalists and worker, as joint- 
 partners in production, the right to exercise control 
 over their separate spheres ; the capitalist over the 
 larger policies of industry and trade, the worker over 
 the conditions and practical organisation of his work. 
 In a word, we must temper service with liberty and 
 liberty with service, and unite the several members of 
 the economic body in willing co-operation, while 
 leaving to each the free performance of their natural 
 functions. What will be the sphere of each and what 
 the limits of their power, it must be our next business 
 to define more closely. 
 
 (i) What then will be the sphere of the State ? 
 First, over certain branches of production it will 
 exercise absolute control. These are the " natural 
 monopolies " above mentioned, in which since demand 
 is constant and the supply secure, competition is super- 
 fluous and wasteful. Some of them the State controls 
 already ; the Postal service, the Telegraph, and in a 
 less degree, public health and education. Besides 
 these the supply of water, gas and electric light 
 is for the most part even now in the hands of the 
 community, as represented by local Boards and 
 Councils. In the future however. State control will no 
 doubt be extended further, over the railways cer- 
 tainly, and, as some think, over the mercantile marine. 
 Whether the mines, too, will become national property 
 is a more controversial question ; the consumer's 
 interest seems to demand it ; but on the other hand it 
 must be remembered that in the exploitation of mines 
 there is a distinct element of financial risk, and for this 
 reason private enterprise is likely to be more efficient 
 
COMPROMISE 239 
 
 and productive.* There will no doubt be other 
 industries over which the same controversy vvill be 
 waged ; but generally speaking the burden of proof 
 will lie with the Socialists ; and unless the advantages 
 of State control are definitely established, the Govern- 
 ment will do well to leave the industries in private 
 hands. This brings us to our second point ; and forces 
 us to ask what will be the relation of the State towards 
 competitive production, and to what extent will it seek 
 to interfere between the Capitalist and the workers. 
 The answer plainly is that the State will interfere as 
 little as may be. By hypothesis, the individual, be 
 he capitalist or worker, will be free to bargain as he 
 pleases ; and any habitual interference of the State 
 in the matter of prices, wages and profits generally 
 would be a fatal encroachment on that liberty. Where 
 however the liberty is used (as it may be used) in a 
 manner which is clearly detrimental to the public 
 interest, then it will be not only legitimate, but 
 necessary for the State to interfere. For example, if 
 the frequency of strikes cr lockouts, or the magnitude 
 of a particular strike or lock-out, causes serious incon- 
 venience to the consumers, the Government may 
 impose its veto with perfect justice and enforce a 
 settlement by compulsory arbitration : for all abuse 
 of liberty when objectionable to society at large, 
 becomes a crime, and all crime it is the Law's function to 
 
 * There is another consideration which seems to point a different 
 way, and which would lead to a Syndicalist rather than a Socialist 
 solution of the coal-mine problem. Although the financial risk of 
 mining is borne by the mine-owner, another yet more vital risk is borne 
 solely by his employees — I mean the personal risk to life and limb. 
 Even a high wage seems scarcely an adequate compensation for the 
 dangers which these men run ; and that the profits of their risk-taking 
 should go to a man who does not share it, seems less than justice. 
 There is therefore much to be said for the scheme whereby the mine- 
 owner would be content to receive some fixed standard of remuneration, 
 while allowing the miners themselves to make what surplus profit they 
 can out of their perilous occupation. The same argument would 
 perhaps be equally applicable to the Mercantile Marine. 
 
240 NEW FALLACIES OF MIDAS 
 
 prevent. Again, the State will have a direct interest 
 in maintaining the efficiency of national production ; 
 and its further interference will be called for, when 
 that efficiency is seriously impaired by the conse- 
 quences of unrestricted competition. Thus, if 
 Capital seeks to reward Labour with less than a living 
 wage, the State will have a word to say. For it is 
 obvious that to maintain an industry whicii cannot or 
 will not offer a decent livelihood to its employees, 
 is bad national economy ; since the national efficiency 
 depends upon the health and vigour of its citizens and 
 therefore upon the standard of life which they enjoy. 
 Capital then cannot be permitted to secure its profits 
 at the price of the people's health. Nor upon the other 
 hand can organised Labour be allowed to misuse its 
 power at the expense of Capital. We know that a 
 certain minimum standard of remuneration is necessary 
 if individuals are to be induced to save at all ; so to 
 deprive Capital of its rightful share of profits is a 
 suicidal policy which will either discourage men from 
 saving altogether or will drive them to invest their 
 capital abroad. It will therefore be the State's 
 duty to defend the rights of Capital no less than the 
 rights of Labour, and a sane public opinion would 
 undoubtedly refuse to endorse the exorbitant demands 
 of labour, should such demands in fact be made. If 
 (as is likely enough) there are industries which will 
 prove incapable of supporting this two-fold burden, 
 these must either abandon the struggle and cease 
 working or (if considered indispensable to the com- 
 munity's existence) must be bolstered up by a system 
 of State aids or bounties. To this, however, there 
 would be one inevitable corollary. Wherever bounties 
 are accepted, a corresponding obligation is incurred ; 
 and if a particular industry or a particular group of 
 employers is guaranteed against the accidents of 
 demand or against the stress of foreign competition, 
 
COMPROMISE 241 
 
 then they cannot possibly deny the State's right to 
 investigate their methods, and insist upon a proper 
 use of their resources. How far the State would exer- 
 cise this right would depend on circumstances ; the 
 scope of its authority would naturally be in proportion 
 to the assistance which it gave. Were it for instance 
 to undertake (as Sir Leo Chiozza Money thinks it 
 should) the entire organisation of the country's food 
 supply, buying the produce from the farmers at a 
 bonus price and handing it on in turn to the retailers, 
 then it is clear that the State would be in a very strong 
 position. The same national necessity which make 
 it needful to encourage British agriculture, demands 
 also that British agriculture should be efficiently 
 conducted ; not only would the State supervise the 
 teaching of agricultural science, subsidise chemical 
 research, provide co-operative machinery, and indicate 
 the best methods of increasing our production ; but 
 it would have every right to insist upon its advice being 
 taken ; it could press the farmers to make use of these 
 facilities and even penalise culpable inefficiency or 
 waste. Industries less dependent on public aid would 
 not be equally at the beck and call of government 
 departments. The degree of State control Would 
 vary, as it varies among secondary schools and uni- 
 versities which receive financial grants from the 
 Exchequer. But in any case the State's right of 
 interference would not relieve the individual farmer 
 or capitalist of his personal responsibility. For he 
 would not as under Socialism, be the State's servant ; 
 nor would the State be owner of factory or farm. 
 Where each had a stake responsibility would be shared ; 
 and both would be working in co-operative partnership 
 for the good of the community at large. 
 
 To such a course there are however many draw- 
 backs, the more liberal school of politicians are strongly 
 opposed to it ; and hitherto at least they have received 
 
242 NEW FALLACIES OF MIDAS 
 
 the backing of the nation. The events of the next few 
 years (and niore particularly the terms of the peace 
 settlement) will decide the issue. If complete victory 
 is granted to the allied cause, we may be almost 
 certain that the Free Traders will have their way. 
 They hold that it is not only unnecessary to prop up 
 home industries by artificial means, but also positively 
 un\^ise, and they are not without logical grounds for 
 their belief. Economic self-sufficiency, they argue, may 
 seem at first sight to offer us greater security in time of 
 war ; but in actual fact, it has been otherwise. It was 
 our very dependence upon the supplies from overseas, 
 that built up for us a mercantile marine capable of 
 maintaining the welfare of our population and the 
 efficiency of our armies throughout these years of 
 stress ; and had we endeavoured, as the enemy have 
 done, to be self-contained and self-supporting, it can 
 hardly be doubted that we should have suffered the 
 same scarcity and privations that they have done. 
 We may expect therefore that in the future not only we 
 ourselves, but other nations too (upon the Allied 
 side at least) will welcome more and more a free inter- 
 change of commerce, each prodiicing that which by its 
 resources and abilities it is best fitted to produce, and 
 each looking upon the activity and enterprise of others 
 as complementary rather than antagonistic to its own. 
 Free Trade is after all, the economic counterpart to a 
 league of free peoples ; and, commercial inter- 
 dependence is the surest guarantee of the world's 
 peace. The wise government therefore will allow 
 national industry to follow its natural course. Some 
 special facilities, where such are needed, it will doubtless 
 be prepared to give. A natural monopoly (such for 
 instance, as the milk supply) which the Government 
 does not wish to take into its own hands it may well 
 place in a privileged position, and regulate in much the 
 same manner as it regulates the private gas companies 
 
COMPROMISE 243 
 
 to-day. But, for the rest, the State will not seek to 
 meddle in affairs which are not its own ; rather, it 
 will leave the enterprise of individuals to find a natural 
 outlet. At home, it will not foster one trade or assist 
 one class at the expense of others. It will enforce no 
 special policy upon them, and take no sides against 
 particular countries abroad. 
 
 As between employees and employed, the State will be 
 an impartial witness of the industrial tug-of-war. It will 
 not endorse the claims of the workers, because the 
 workers are numerous ; neither will it favour the 
 capitalist because the capitalist is powerful. Demand 
 and supply will still continue (except for the limitations 
 above mentioned) to regulate the market. The rise 
 and fall of wages and profits will not be governed by the 
 arbitrary justice of some State Department ; but by 
 the natural working of economic laws. The reforms 
 of the future will not proceed from political agitation 
 nor from a tyrannical use of the majority vote, but 
 rather from a mutual good- will and agreement between 
 capitalist and worker ; and to the relations which will 
 exist between these two we now must turn. 
 
 (2) First and foremost, it is clear that the general 
 control of industrial policy will lie with the capitalist.* 
 His right of choice in the disposition of his savings we 
 have already seen to be an essential feature of a free 
 economic society, and that right must, within limits, 
 be secure to him. Besides this, he will be naturally 
 fitted, both by character and by training for the 
 organisation of business. No working man in his 
 senses ever denied the value \ji brains, and the man 
 who rises to a position of command in business as in 
 other walks of life, must needs possess a natural genius 
 for his task ; the less he is hampered in the use of his 
 qualities, the more he will be likely to achieve success. 
 
 * Ultimately, as will later appear, this class will come to include 
 employees as well as employer. 
 
244 NEW FALLACIES OF MIDAS 
 
 It is for the capitalist therefore to initiate and direct 
 the policy of his business, to keep a watch on the world 
 markets, and adjust his methods to their fluctuations, 
 to co-ordinate the working of the several departments 
 and select their heads, to confer with experts and 
 appraise the value of inventions and improvements, 
 and above all to supervise the whole financial system 
 from the framing of the annual budget down to the 
 purchase of a new machine. He takes his natural place 
 as it were captain of the ship, whose duty it is, while 
 others trim the sails or stoke the engines, to set his 
 compass for the port, calculate distances, and resolve 
 what course the ship shall take, and who, from his point 
 of vantage on the bridge, can bring her safe through 
 dangers of reef and current of which his subordinates 
 are but dimly, if at all, aware. The capitalist then will 
 will still remain a commanding and powerful figure 
 in the economic world. It is true no doubt that the 
 inevitable tendency of modern finance is apt to dim- 
 inish the direct and personal control of individuals. 
 Industries are being grouped in vaster units and run 
 on more comprehensive lines. Already small firms 
 are being crushed out or absorbed by bigger houses. 
 Shipping lines are amalgamating : so are the banks. 
 It is the same in every section of industry. And one 
 result of such a development is obvious. The indi- 
 vidual capitalist can no longer remain in absolute 
 control of these large-scale concerns. They are run 
 extensively on capital borrowed from numerous 
 investors ; they are organised and administered by 
 salaried managers ; and the original proprietor retains 
 little more than a controlling share in the company's 
 finance and a place on the directors' board. Yet even 
 so his power is still considerable. Whether he remains 
 (as in very many instances he does) the actual manager 
 and business head, or whether he delegates this task 
 to others, admits the investing public into partnership, 
 
COMPROMISE 245 
 
 and merely watches the use and disposition of his 
 capital with a remote but jealous eye, there is none 
 the less for the capitalist responsibility enough ; his 
 obhgation cannot be shirked ; and while he has a trust 
 to perform to other shareholders, he has an even greater 
 duty towards men in his employ. It is according to 
 his method of discharging this duty, that the true 
 success or failure of his management is to be measured. 
 The wise ship's captain who understands the art of 
 leadership, knows that, if he is to deserve his crew's 
 confidence, he must give them his ; and so, too, the 
 employer will recognise that he cannot get the best out 
 of his men unless he allows them to share responsibility 
 with him. This he may do in two ways. First, he 
 will consult them freely upon all points where their 
 own interests are affected. Not many years ago it was 
 thought beneath the dignity of an employer to enter 
 into such relations with his men. In 1911, the Railway 
 Unions went out on strike because the Company 
 Directors refused to meet their representatives or 
 even to acknowledge their existence. But there has 
 been a significant change since then. During the war 
 industrial committees have been set up in which men 
 and masters sit side by side.* The advantages are 
 twofold ; the masters may often obtain valuable 
 advice concerning the details of organisation, and learn 
 the simplest and most agreeable method of getting the 
 work done. On the other hand, the men will be better 
 able to appreciate the difficulties of their employer, and 
 to take a long-sighted view of plans and projects, and by 
 means of this greater knowledge to reconcile their 
 fellow Unionists to necessary changes. Thus, when 
 during the war the scarcity of cotton compelled the 
 mill- owners to curtail the working hours, the repre- 
 
 * In adopting the recommendations of the Witley Report (1917), the 
 jovernment propose to apply this principle to ail industries under 
 their control. 
 
246 NEW FALLACIES OF MIDAS 
 
 sentatives of the mill-hands, sitting in consultation 
 with thena, were given a clear statement of the whole 
 position, and so were able to convince the others that 
 this step was due to actual deficiencies of raw material 
 and not to the selfish policy of the employers. Such a 
 reform, however, will not in itself suffice, unless it be 
 followed by another ; a large measure of self-govern- 
 ment must also be conceded to the work-shop. Experi- 
 ments have already been made in leaving the control 
 of discipline and conditions in the hands of the 
 employees ; and these have met with astonishing 
 success. They have proved beyond question that the 
 workers can be trusted to settle questions of pro- 
 motion and dismissal fairly, to vote on working hours 
 and holidays without prejudice and (most important 
 of all) to choose the right men to be their own officers. 
 This last is a vital principle of reform. Past experi- 
 ence has shown that the foremen appointed by a 
 manager are generally far more unsympathetic towards 
 the rank and file than the manager himself. It is not 
 altogether their own fault ; for the foreman's is a 
 difficult position, and on him falls all the odium of carry- 
 ing out unpopular instructions. In any case he is too 
 often the cause of much unnecessary friction ; but 
 with stewards holding their authority in part at least 
 by popular election, the danger of friction would be 
 greatly eased. They would form a connecting link 
 between men and masters, being answerable to both. 
 And there would be little real danger that either the 
 stewards themselves would betray the trust, or that! 
 those beneath them would challenge their authority. 
 All sane men are fully conscious of the need for discipline, 
 and though they may resent it when imposed upon 
 them from above, yet such hostility v/ould cease, if the 
 responsibility for maintaning it were placed upon 
 themselves. The autonomous work-shop would in 
 fact reproduce in many features the prefect system of 
 
COMPROMISE 247 
 
 our public schools, with which it has often been 
 compared,* And this systera is a serviceable model as 
 well as a sound analogy ; for it is something more than 
 an antidote for insubordination or a safety valve for 
 discontent. It is an education in itself, a training in 
 responsibility which can develop, as nothing else can, 
 that special genius of the English race, the capacity 
 " to govern and be governed," which is the true secret 
 of our national liberty and greatness. 
 
 3. It remains for us to ask how far this compromise 
 will satisfy the workers. Will they be willing upon 
 these conditions to accept the supremacy of the 
 capitalist ? Or will they still desire to be rid of him 
 altogether and to remove the objectionable necessity of 
 service ? Now in answering this question it must first 
 be said that if industry is to be carried on at all, it must 
 be organised; and organisation is impossible without 
 discipline and authority. Capitalist or no capitalist 
 somebody must command and somebody must obey : 
 and there seems no real reason for supposing that 
 obedience to a Socialist Government or to a Syndicalist 
 Guild would be more agreeable to the individual than 
 obedience to a capitalist employer. Indeed the latter 
 might easily appear to be the lesser of two evils ; for 
 whereas there would be no alternative to the service of 
 Guild or Government, the employee who is dissatisfied 
 with one master is always free to seek service with 
 another. In theory at least, he has the option between 
 continuing his contract or closing it, he has therefore 
 no just cause to quarrel with a contract which is made 
 of his free choice. That contract it is true is a contract 
 of service ; and since under no system can we all be 
 masters, some must of necessity accept a lower room. 
 There is nothing derogatory about service, the soldier 
 
 * Mr. Selfridge has adopted the very phrase in the attempt to 
 institute a system of self-government among his own emplo)7ees. See 
 his recent book on the " Romance of Commerce." 
 
 17 
 
248 NEW FALLACIES OF MIDAS 
 
 must render service to his general, the clergyman to his 
 bishop, even the cricketer to the captain of his team ; 
 and there is no reason in the world why the working 
 man should object to engaging himself to a master, if 
 the terms of the engagement are reasonable and just. 
 Provided that these terms allow him such a measure of 
 responsibility or independence as we have described 
 above, there remains but one point to which the 
 working man might fairly take exception ; and that 
 is the question of profits. 
 
 We need not here repeat the reasons already given for 
 his dissatisfaction with the present system, except to 
 say that they seem often real enough. But let us 
 restate the problem in its simplest form. There are 
 three agents in production ; first the hand-labour of 
 the artisan, second the head-labour of the managing 
 directors, and third the mechanical paraphernalia 
 which represents invested capital ; and of these the 
 last two are frequently, but not always, united in a single 
 person or a group of persons. Now the first claim 
 upon the proceeds of production is naturally the 
 worker's ; whatever happens, his wages must be paid. 
 If there is a salaried manager, his share is equally secure. 
 The surplus, when these deductions have been made, 
 goes to the capitalist, and this on the face of it seems 
 fair, seeing that his claim can only be considered when 
 the other two are satisfied, and that the risk is therefore 
 almost entirely his. But though to this extent his 
 claim to the surplus is well founded, yet there is 
 another side to the question. After all it is not the 
 capitalist that has himself produced the surplus. 
 Any increase in the output of the factory is not due 
 to him ; it is due to the skill of the management and 
 to the energy of the workers. Naturally then the 
 workers will ask why they should work extra hard that 
 the capitalist may be enriched ; and why they should 
 have no share in that which their extra labour has 
 
COMPROMISE 249 
 
 produced. If production is indeed to be considered 
 as a partnership between capital and labour, then it 
 seems that there must also be a fair division of the 
 spoils. Profit-sharing or co-partnership is no new 
 invention. It is an experiment which has frequently 
 been tried ; but for one reason or another it has 
 more often met with failure than success. The cause 
 of the break-down however has arisen, not from any 
 inherent weakness of the scheme itself, so much as from 
 the practical difficulties of its application. It has 
 failed, partly because the workers are not easily con- 
 vinced that their own share is proportionate to their 
 deserts ; but even more because they mistrust the 
 fundamental honesty of the capitalist's intentions. 
 They will not readily believe in the goodwill of a man 
 whom they have learnt to regard as their natural 
 economic enemy ; and they see in every offer of 
 co-partnership a stratagem for extracting a maximum 
 of work by a cheap and wholly inadequate concession.* 
 Such suspicions may or may not be well founded ; 
 but though under the present circumstances they seem 
 to be a fatal bar to all profit-sharing schemes 
 whatsoever, that is no reason for condemning such 
 schemes outright. Once the ground for suspicion is 
 removed, and a mutual confidence is re-established, 
 a basis for compromise and equitable partition could 
 undoubtedly be found. 
 
 For all this it cannot be easy, indeed, it is quite 
 impossible to satisfy both parties, unless both are 
 prepared when needful, to make some sacrifice for the 
 common cause. Most often the burden of sacrifice 
 will fall on the employer. For, it must be remember- 
 ed that if being something more than a mere investor, 
 he manages the business by personal direction, he has 
 in fact a very real claim upon the larger portion of the 
 
 * The practical difficulties of Profit sharing and Co-partnership are 
 more fully explained in the note at the end of this chapter. 
 
250 NEW FALLACIES OF MIDAS 
 
 profits. What contributes most to the success of 
 industrial enterprise is not the hand-labour of the 
 men, but the brain labour which organises and directs 
 it. It is by thought and calculation and foresight 
 that large economies are effected, processes improved, 
 new machinery installed ; in these and in a hundred 
 other ways one skilful organiser can do more to increase 
 the profits, than the industry and efficiency of a 
 thousand factory hands. So the employer's claim to 
 the larger share of profits is genuine enough ; and if 
 money-making were his only object, there would be 
 justice in it too. But we know that profit is not the 
 only spur to effort and endeavour. There is many a 
 man working for a fixed salary, who will do his best 
 though it should not add one penny to his income. 
 For such a man, and for the capitalist no less, there 
 are other compensations, other rewards, the satis- 
 faction of prosperous enterprise, the sense of power, 
 the pride in a task efficiently performed and in its 
 usefulness to man. Enjoying these in a greater degree 
 perhaps than other men, it is little enough surely to 
 ask of the capitalist that he should not grudge his 
 employees a share in the fruits of his success ; and 
 though it may be hard enough to assess the relative 
 values of manual and intellectual labour (for it is 
 always hard to compare two incommensurable things) 
 yet it is surely not beyond the wit of reasonable men 
 to come to an agreement. 
 
 There remains however a second difficulty to be met, 
 and herein it will be the worker's turn to make some 
 sacrifice. Just as for the capitalist there can be no 
 profits without risks, so, too, the workers cannot expect 
 to reap the benefits of success, without sharing the burden 
 of failure. Common justice forbids the alternative of a 
 one-sided bargain. It cannot be " heads I win and 
 tails you lose " in the parnership between capital 
 and labour. If the workers share the profits, they 
 
COMPROMISE 251 
 
 must share in the losses also. And here it is that 
 the difficulty arises, for it is abundantly clear that to the 
 individual worker, with his too slender margin of 
 resources, such losses may mean nothing short of 
 complete catastrophe. 
 
 For we cannot expect the artisan out of his two 
 pound wage to make good a loss which might cut 
 down his weekly income to a pound. If the mischances 
 of industry are to be met even in a small degree out of 
 his pocket, some better scheme must be found. Can we 
 in other words advise some form of insurance whereby 
 to distribute and diminish the incidence of losses ? 
 There is, as it so happens, a convenient precedent to 
 follow ; of profit-sharing schemes the most satisfactory 
 is known as the shop-piece-work system. The principle 
 of this i s simple enough ; when the time comes to 
 make the distribution of the profits, instead of assessing 
 each man's share in proportion to his individual 
 out-put, the basis of division is reckoned by the united 
 out-put of the shop. By this arrangement the weaker 
 members suffer no handicap ; each will do his best for 
 the good of all ; and by the force of public opinion and 
 the sense of common interest a high level of industry 
 will be maintained. Now if this scheme were further 
 extended to include not merely the members of a single 
 shop, but a group of factories or perhaps even an entire 
 trade, it is easy to see how the difficulty of losses might 
 be solved. For being thus widely spread, the losses, 
 if not altogether negligible, would not at any rate be 
 crippling. At any given time it will be tolerably certain 
 that while one particular factory may suffer failure, 
 the majority would succeed, and upon the whole 
 reckoning there would still be a balance of profit to 
 distribute. Whether or no the employers also would 
 choose to pool their resources in a similar manner, is for 
 themselves to decide ; but, as we have said above the 
 natural tendency of the future will lie towards a greater 
 
2 52 NEW FALLACIES OF MIDAS 
 
 concentration and co-ordination of industry. The firm 
 with a million pound capital will probably become 
 more common ; the firm with a hundred thousand 
 pounds capital more rare. And in the main this change 
 will be all to the worker's good. Where the small 
 capitalist must in self-defence be niggardly and grasp- 
 ing the larger firm can afford to be generous. The 
 man who controls niany factories will not only be less 
 eager over trifling profits, but he will be more proof 
 against dangers of incidental failure ; he can take the 
 ill luck with the good, and play off a gain here against 
 a loss elsewhere. The very magnitude of his resources 
 will give stability to his position, as well as open up fresh 
 opportunities of organisation and scientific enterprise. 
 By all this the workers will also benefit ; they will be 
 less likely to incur any overwhelming losses ; and no 
 special machinery may be needed to protect them 
 against such accidents. In any case, however, it is 
 clear that with proper adjustment they could be 
 made capable of bearing their share in the losses as 
 well as enjoying their share of the profits ; and there 
 seems no sufficient reason, either on this score or on 
 any other, to reject the system of profit-sharing as a 
 basis of industrial compromise. Nor need we fear the 
 failure of a system which thus presses the principle of 
 partnership to its logical conclusion. For it does more 
 than call a truce to the competition between capital 
 and labour ; by uniting them as it must not only in 
 the pursuit of a common interest, but also by the 
 acceptance of a mutual sacrifice, it will awaken a more 
 generous spirit of co-operation and so lay firmly the 
 strong foundations of an enduring peace. 
 
 That this arrangement is practicable, we need not 
 doubt. But the last word has not yet been said. 
 Such a compromise cannot be regarded as a final 
 solution of the problem of industry, and it falls short of 
 finality for the very simple reason that sharing in 
 
COMPROMISE 253 
 
 industrial profits is not the same thing as sharing in 
 industrial property. Now it is clear that either we have 
 been right in what we have said about the advantages 
 of owning property, or we have been wrong. If we 
 are right, and if the sense of ownership is a real stimulus 
 to effort, enterprise and thrift, then we cannot in 
 justice deny to the employed what we have commended 
 in the case of the employer. We cannot be contented 
 with half measures ; and once we are prepared to per- 
 petuate Capitalism, there can be no stopping short 
 until we have ensured that labour should become 
 capitalist too. Happily, there is no great obstacle 
 to such a development ; indeed there are abundant 
 signs that it is coming. The working class are already 
 investors on a considerable scale ; and by that I mean 
 something much more than the possession of a trifling 
 balance at the Savings Bank. They hold shares in 
 every sort of business, and derive from these an income 
 which in 19 10 was estimated at thirty millions. But 
 perhaps the most interesting example of industry 
 capitalised in no small degree by working folk, is to be 
 found in the Co-operative Societies of consumers, of 
 which we spoke above. It has been asserted, though 
 probably with some exaggeration, that one-third of the 
 country's retail business is already in the hands of the 
 co-operatives. The movement has clearly a great 
 future ; it is sure to spread, since it attracts members 
 by the double inducement of low prices and a bonus 
 divided on surplus profits ; and, though the range of 
 its extension is obviously limited by the fact that the 
 number of commodities to which it can be applied is 
 also limited, yet it will, within those limits, do most 
 valuable service by encouraging the habits of economy 
 and investment. At any rate it is not too much to say 
 that thrift is gradually becoming popular among the 
 masses ; and, what is more important, it is becoming 
 now for the first time possible. So long as the income 
 
254 NEW FALLACIES OF MIDAS 
 
 of the working man was barely sufficient to provide 
 him and his family with the necessities of life, it was 
 not merely difficult, it would have been definitely 
 wrong for him to save ; for saving would have meant 
 that he or his children must go short of proper nourish- 
 ment and comfort. That was the dilemma with which 
 in the past the majority of the working class was faced. 
 But the turning point has come, and we now see a 
 clear promise of better things. One great result of the 
 war will be to establish a higher standard of remunera- 
 tion for every kind of labour. On this Labour will 
 itself insist and will take no denial ; even if bad times 
 or trade depression follow the return of peace, they 
 will not in the long run be sufficient to prevent though 
 they may postpone the change. Whatever economic 
 difficulties lie immediately ahead of us, we may be 
 confident that they will be but a passing phase, and that 
 given the energy and the will to overcome them, we 
 shall emerge far more prosperous and far more secure 
 of progress than we were before. The last three years 
 have witnessed a far-reaching revolution in the 
 mechanical methods of production, which is perhaps 
 without a parallel in history. Improvements and 
 inventions have been made for which we might without 
 the w ar have waited half a century. And if we turn our 
 opportunities to proper use, then the possibilities of 
 labour-saving machinery, scientific management and the 
 consequent multiplication of industrial out-put are 
 almost unlimited. As a consequence the nation's 
 wealth will increase by leaps and bounds ; and Labour's 
 chance vvill have arrived ; in this new wealth the 
 workers will claim a share and they will get it. Nor 
 is there any reason to doubt that it will be a far more 
 generous share than in the past,, This (provided the 
 profits of industry are great enough) will involve no 
 prejudice to the just claims of capital, for that will 
 receive at least the same standard of remuneration as 
 
COMPROMISE 255 
 
 before. It is not that the capitalists will receive less, 
 but that the working man will receive more ; and 
 when that happens, he will be under the necessity no 
 longer of consuming all that he earns. He will be able 
 to save and by the investment of his savings to join 
 the ranks of the capitalist class. 
 
 With wages sufficient for his wants, and an ample 
 margin for investment, it might well be thought that 
 the working man would have attained the summit of his 
 hopes. Yet even so there is one last step to be taken 
 before the old reproach of wage-slavery can be done 
 finally away. When we claim for property (as we 
 have claimed above) that it brings out a man's best 
 gifts, stimulates his interests, spurs his energies, and 
 teaches him the lessons of independence and responsi- 
 bility, it is not so much of the mere possession of 
 property that we are thinking but rather of the active 
 use of it. Deep down in every human being there is 
 planted, it would seem, something of the creative 
 instinct of the artist ; and we take an artist's pride in 
 all effort expended upon that which is peculiarly our 
 own. From the millionaire who watches over the 
 business it has taken nim a life-time to build up, down 
 to the peasant proprietor who comes as it were to know 
 and love every animal and plant upon his farm, it is 
 always the same story. It may be that man is 
 incorrigibly selfish ; yet we must take him as we find 
 him. It is a law of his nature that the more stake he 
 has in any enterprise, the greater will be the zest he 
 will throw into his task, and the greater the happiness 
 that it will bring him. If, therefore, we accept this 
 law, it will not content us that the working man 
 should invest his savings somewhere. He must be 
 able to invest them in the iirm or factory where his own 
 work lies. His interest in the prosperity of the business 
 must be no longer the indirect interest of a servant, it 
 must in some degree be the direct interest of a pro- 
 
256 NEW FALLACIES OF MIDAS 
 
 prietor. His alliance with capital which begins in 
 co-operation, must end in a genuine partnership. He 
 must become in a real sense his own employer. Now 
 to such a course the way does not at first sight seem 
 easy. There are, it is true, many joint-stock com- 
 panies, the shares of which are open to the public 
 purchase ; but in a large majority of manufacturing 
 firms, this is not the case ; the financial interests are 
 vested either with a single family or with a close ring 
 of private partners. To expect these voluntarily to 
 forgo so valuable a prize and to surrender even a 
 proportion of the shares to mere employees is to expect 
 impossibilities ; and the advent of co-partncxship 
 might be indefinitely postponed, were it not for one 
 favouring circumstance. For the truth is that the 
 contribution of the employees will be needed. As time 
 goes on industries will tend (for the reasons mentioned 
 above) to be organised upon a larger scale. Firms 
 which have done business on a capital of £100,000 
 will drop out ; and their place will be taken by com- 
 panies which will count their capital by millions, and 
 these will have a constant tendency to expand. There 
 will be an enormous demand for fresh money, which 
 the existing shareholders will be quite unable to meet ; 
 shares will then be offered to the public ; and for the 
 working man who has savings to dispose of, the door 
 will then stand open. Such a development may yet 
 be a long way off, but that it is possible has been proved 
 already in the Cotton Trade. There it has long since 
 been the fact that the Loan Capital is largely subscribed 
 by the mill-hands themselves, and there seems no valid 
 reason why what has succeeded in one trade should not 
 be extended to others. Given the power and the 
 opportunity the working man will not be backward to 
 invest ; and sooner or later the day may yet arrive 
 when he will have a considerable part, perhaps even a^ 
 leading part in the capitalisation, and so a definite 
 
COMPROMISE 257 
 
 share in the organisation also, of his own industry. 
 What a reversal of present day conditions this would 
 involve it is not difficult to see. Picture for a moment 
 the practical changes which would inevitably follow. 
 The annual meeting between the Shareholders and 
 Directors of the Company would no longer be attended 
 by a mere sprinkling of haphazard critics, only partially 
 interested, and for the most part wholly ignorant of the 
 detailed working of the business. In their place would 
 sit an eager gathering of foremen and managers, 
 operatives and clerks, — each of them possessing expert 
 knowledge about the details of his own department, all 
 of them equally intent to criticise mistakes, to air their 
 grievances, suggest new policies, and promote the 
 common welfare of the whole establishment. The 
 election of directors would now have become a reality ; 
 representatives would not be chosen for the sake of 
 some high-sounding title or upon a hearsay reputation 
 for sagacity. The coveted honour would be bestowed 
 on those who had served their apprenticeship under the 
 jealous eye of their fellow workmen, and who had proved 
 themselves not unworthy of the trust. For chairman 
 they would naturally nominate the one time master of 
 the business — the capitalist employer ; and provided 
 always that he retained the confidence and good^^ill 
 of his new colleagues, he would continue to exercise the 
 influence and authority to which his large stake in the 
 concern entitled him. If, however, through negligence 
 or intractability on his part he were to forfeit that 
 confidence and fail to secure his re-election to the 
 Board, his position would be wellnigh intolerable. 
 In all likelihood he would be driven to sell his share of 
 the capital ; and either his place would be taken by 
 others who were in better sympathy with the poHcy of 
 the shareholders, or else the shareholders themselves 
 would combine to buy him out. Such an occurrence 
 would no doubt be rare ; the shareholders would be 
 
258 NEW FALLACIES OF MIDAS 
 
 too discreet lightly to abuse their power ; they would 
 be too much interested in the prosperity of the concern 
 to flout the man whose practical abilities have been 
 proved by his success, and whose interest would after 
 all be identical with their own. Yet the fact remains 
 that they would virtually possess the power to retain 
 or to discard upon a vote of confidence the services of 
 the very man who in former days would have stood 
 to them as master. The truth is that economic 
 evolution would but have followed the same lines that 
 our political development has already taken ; and 
 just as the country is governed no longer by an absolute 
 monarch owing responsibility to no man, but by a 
 minister who is the people's servant and who derives 
 his whole authority from the support of popular 
 opinion, so the arbitrary power of the capitalist 
 employer would have disappeared ; and the true 
 industrial sovereignty would rest with the industrial 
 constituents. The self-appointed autocrat would have 
 become the representative governor. Yet, if he be 
 wise and tactful, the capitalist need fear no loss of 
 power. Government by consent is perhaps the most 
 effective form of government that can exist ; a strong 
 prime minister can do things, and work changes which 
 no tyrant could ever have attempted. Seeing, there- 
 fore, what advantages his financial strength and ripe 
 experience would afford him, it would be a fool of a 
 capitalist who could not keep his hand on the reins. 
 He will exert his authority however not so much because 
 he is the largest individual shareholder, but (what is far 
 more) because he is the most valued servant of the 
 firm. By virtue of the same qualities which made him 
 master, he will remain master still ; and, although his 
 monopoly of capital will have gone, nis monopoly of 
 knowledge and experience will remain. For the power 
 to render service will then be the measure of a man's 
 importance. When all are capitalists, the natural 
 
COMPROMISE 259 
 
 order of things will have returned ; and the skill of the 
 human hand or human brain will be supreme. Man 
 the producer will no longer bow down to whoever 
 owns the mechanical agents of production, craving the 
 use of them and selling his services for bread. Rather, 
 forasmuch as he has skill to use them, they will gladly 
 be offered for his use, just as money which men can- 
 not themselves turn to profit, is put at the disposal 
 of a bank which can. Capital, in short, will no longer 
 hire labour, hut labour [ivhether of hand or brain) will 
 hire capital. The tables will have been turned. 
 
 Thus, after all, the Syndicalist's dream will have 
 come true, though not in the way he had expected. 
 The producer will indeed have come by his own, but not 
 by the forcible expropriation of the capitalist. The 
 Syndicalist in fact, was at once both right and wrong. 
 His error, like the Socialist's, springs from a crude 
 impatience and from a narrowness of vision. Both of 
 them see things with the partial eye of the theorist 
 who imagines that in his own theory the whole of truth 
 is contained. They are intolerant of rival philosophies 
 and can scarcely be persuaded but that there exists 
 some single panacea which will set the whole world to 
 rights. Yet truth, they might have remembered, 
 has many faces ; the theories of Syndicalist, Socialist 
 and Individualist as well, are complementary and 
 compatible rather than contradictory or exclusive. 
 For each has seen some side of the truth. In part the 
 Socialist is right ; for there are indeed many functions 
 of production which are best to be managed by the 
 State ; in part the Syndicalist is right ; for the power 
 to produce is what ultimately counts. In part, too, 
 the Individualist is right ; because it is for a man 
 himself to shape his own character and destiny. So in 
 the evolution of the perfect Society, each of these three 
 theories will play its separate part, and each contiibute 
 to the formation of a concerted whole. By what 
 
26o NEW FALLACIES OF MIDAS 
 
 precise steps that Society will be evolved, time alone 
 will show. One thing is certain. Theories will not 
 of themselves accomplish it. Changes will proceed 
 from the slow and steady pressure of our economic 
 needs, rather than by the eager anticipations of 
 reformers. Long before the very idea of Socialism 
 had been conceived of, it was the people's need, and not 
 some philosopher's catch-word that gave Athens a 
 State-theatre ; and all nations must be obedient to 
 the same compelling logic. Among ourselves the 
 natural monopolies will one by one be nationalised, as 
 the advantages and economies of State control come 
 home to us. So again, as years go on, the better 
 education of the workers will fit them for responsibility ; 
 increasing prosperity will place the acquisition of 
 capital within their grasp ; and then. Syndicalism or 
 no Syndicalism, they will inevitably receive a share 
 in both. And meanwhile, whatever attacks, in Press 
 or Parliament or on revolutionary platforms, may 
 menace the capitalist's position, he will stand secure 
 against them all. Even if he is temporarily removed 
 he will return. The Bolshevist imagines in his foolish 
 heart that by destroying the capitalist in Petrograd, he 
 will have struck a death blow at capitalism itself, but 
 before the year is out, he will surely find himself at the 
 mercy of a capitalist who keeps shop in Berlin or 
 New York. The capitalist cannot be ousted, because 
 he is indispensable. He is the embodiment of the three 
 most vital elements of economic life, brains, enterprise, 
 and thrift, and to deny the individual the free use and 
 just reward of these is to strike at the fundamental 
 instincts of human nature. And human nature, 
 despite man's own efforts to defeat it, must assert itself 
 and in the end prevail. As the world pursues its 
 course onward through the centuries, there will doubt- 
 less be false starts, tragic blunders, and fierce reactions. 
 It will pass through many phases. It may well be 
 
COMPROMISE 261 
 
 that at one time or another it will v/itness the Socialist 
 State or the Syndicalist Society in being, just as some 
 would say that we have already had the Individualistic 
 Society. They will not last. For taese are able to 
 satisfy but one side of human nature and no more ; 
 but in the perfect society, if man has patience to 
 await its coming, every side of his nature will find its 
 adequate fulfilment. 
 
 (iii.) 
 
 And now, perhaps we need to remind ourselves 
 that we are living in the present, and are face to face 
 witn the problems of to-morrow. 
 
 Prophecies cannot help us greatly ; and though we 
 have sketched the lines of the ideal compromise it 
 must be admitted that the lines are vague. Yet 
 perhaps it is better so. The most elaborate and clear- 
 cut of political codes is not always the most permanent 
 or the most effective ; rather it is the vague elastic 
 structure of the English constitution which commands 
 the admiration of the world. Strict definition of powers 
 and functions which leaves no room for change and 
 growth can give no guarantee of permanence ; for 
 the machinery wnich the human mind creates to-day, 
 it will outgrow to-morrow ; and no system can impose 
 an artificial harmony which does not exist in the pur- 
 poses of men. So, whatever the form it takes, the 
 compact between Capital and Labour must depend in 
 the last resort upon the goodwill and good sense of either 
 party. Both must be prepared to bear in some degree 
 the other's burdens ; both strive to comprehend the 
 other's mind. By the spirit of " sweet reasonableness " 
 and self-restraint without which our political system 
 would long ago have resulted in chaos, we have in fact 
 achieved unity, order and continuous development. 
 And the same spirit may yet in the future serve to 
 
262 NEW FALLACIES OF MIDAS 
 
 work the same miracle upon the warring elements of the 
 economic world. 
 
 One word should perhaps be added in conclusion. 
 Good will, as I have implied, is not of itself enough ; 
 good sense is also needed. The best intentions are no 
 substitute for brains ; and business must still be 
 business, not philanthropy. Nor would the workers 
 themselves desire to have it otherwise ; they ask for 
 justice, confidence and consideration, but not for 
 sentimental indulgence ; and the ideal employer 
 will give them what they ask. He will neither pamper 
 them with ill-timed bounty nor harass them by fussy 
 interference. Small good can come of a spurious 
 paternalism which does everything for the workers 
 that they ought to do for themselves. It is idle to 
 furnish them with swimming baths and libraries, 
 concert halls and playing-fields if thereby they are 
 robbed of those opportunities of self-help and inde- 
 pendence which count most in the making of men. | 
 Nor on the other hand will the ideal employer lose ' 
 sight of his wider duties towards Society at large. His 
 is indeed no narrow responsibility. The influence of 
 his actions is felt far beyond the circle of his ov/n factory 
 hands and the results of his policy will outlast his 
 life-time. As much harm may be done by running his 
 business at a loss for charitable ends as by the most 
 shameless profiteering. Certainly he will earn no 
 thanks from the general public, if he overpays his 
 employees at their expense ; and, if through the 
 expenditure of his rightful profits in gratuitous gener- 
 osity, he fails to increase his capital, improve his plant 
 and develop his business properly, then he will but 
 impede industrial progress by a mistaken sense of 
 kindness. In short he must take wide views, consider- 
 ing how trade will be affected by his policy, what too 
 will be its influence on rival firms, and what on the 
 consumer ; and while promoting the welfare of the 
 
COMPROMISE 263 
 
 individual workers he will not forget the interest of the 
 State whose members they also are. Between these 
 many claims and counter claims the choice cannot be 
 simple ; to reconcile them all requires a difficult 
 combination cf self-sacrifice and worldly wisdom, 
 uniting as it were the prudence of the serpent with the 
 gentleness of the dove. So before the patriot employer 
 there lies a task immensely complex, immensely 
 arduous, and immensely repaying too. Then and 
 then only will he have succeeded in it, when all these 
 rival claims are reconciled, when, each in his allotted 
 station, every single man whom he employs is enabled 
 to exercise his best abilities both for his own good and 
 for the good of all the others, and when, finally, each 
 industry is so organised and so directed as best to serve, 
 not the private advantage of employer or employed, 
 but the healthy and prosperous development of the 
 whole community. 
 
 NOTE ON PROFIT SHARING. 
 
 During the last hundred years many schemes of 
 Profit-sharing have been tried, occasionally with 
 success, but more frequently the reverse. Some 
 schemes have proved in practice more serviceable than 
 others, and though there is no wide divergence in the 
 principle involved, there is considerable difference in 
 the actual machinery employed. In some cases the 
 workman receives an extra bonus which varies accord- 
 ing to the amount of the out-put or the market price of 
 the finished product. Thus in the iron industry, a 
 furnace keeper is first paid his normal wage and then, 
 over and above that, he gets an additional percentage 
 according to the price of pig-iron. The bonus may 
 be apportioned in two ways. It may go to the indi- 
 vidual worker in proportion to the quantity or speed of 
 his individual out-put ; or it may be divided equally 
 
264 NEW FALLACIES OF MIDAS 
 
 among the whole body of workers, according to the 
 aggregate out-put of the shop. The latter system is 
 known as shop-piece-work. Another device aims at 
 taking the employees into partnership and giving them 
 a real stake in the industry. In this case the payment 
 of the bonus takes the form of allotting the employees 
 shares in the capital of the firm. On paper, each of 
 these schemes would appear both reasonable and 
 generous, but for one reason or another they have nearly 
 always failed. Out of 300 profit-sharing experiments, 
 initiated since 1829, only 133 survived in 1912. This 
 failure is due in most cases to the opposition of the 
 Trades Unions. To them all forms of Profit-sharing 
 are equally odious ; and when in 1917 a writer to the 
 Times discussed the conditions of industrial settlement 
 after the War, he|declared that the mere suggestion of 
 such an arrangement would be absolutely fatal. This 
 opposition of the Unions is broadly speaking due to 
 two causes. One is, more or less, a special and acci- 
 dental cause, being bound up with the tactics of the 
 Unions in the organisation of their forces. The other 
 is more fundamental and challenges the whole object 
 and principle of Profit-sharing. 
 
 The first and special cause is briefly this. As we 
 have shown the success of any Labour combination 
 chiefly depends upon its ability to present a united 
 front and act as a single body. Division is fatal ; it 
 will never do, for example, if, when the miners of one 
 pit are dissatisfied with their wages and decide to go 
 on strike, their fellow unionists in the next county 
 refuse to join them because their wage is satisfactory. 
 It is an axiom of Trades Unionism that all must act 
 together and the strong support the weak. Now 
 under the profit-sharing system, the amount of the 
 bonus paid to the workers will differ from mine to 
 mine, and from factory to factory. The factory which 
 is blessed with up-to-date machinery and an efficient 
 
COMPROMISE 265 
 
 manager, will make large profits and the workers will 
 benefit accordingly. A second, which is less fortunate 
 in these respects will be less profitable, and the 
 workers will be correspondingly ill-paid ; but when 
 they endeavour to obtain redress they will receive 
 no support from their more fortunate comrades. So 
 there is a fear lest the solidarity of the Union be thus 
 impaired ; and very naturally the Union leaders have 
 been driven by this fear into opposing the whole policy 
 of profit-sharing. Yet in the long run, such an objec- 
 tion need hardly be fatal to the project. For, as the 
 Unions win for themselves a more assured position, 
 and as their members are educated more and more 
 to realise the supreme importance of united action, the 
 danger will disappear ; and when moreover the other 
 ends which the Unions now hold in view are success- 
 fully attained, they need no longer fight so shy of a 
 certain disparity in profits. Perhaps however the 
 surest method of setting such fears to rest would lie in 
 an extension of the shop-piece-work system. If the 
 bonus were calculated upon the aggregate profits of 
 the entire trade, there would no longer be any ground 
 for complaint. The members of the less prosperous 
 factory would benefit by the prosperity of others ; 
 and yet all alike would feel that their own earnings 
 were dependent in some degree upon their own 
 individual efforts. ^ 
 
 So much for the first objection to Profit-sharing ; 
 the second is more vital. It has its roots in the 
 inveterate suspicion with which all employers are 
 regarded. For the workers cannot as yet be brought 
 to believe that the concession is ever offered from 
 purely selfless motives. " Timeo Danaos et dona 
 ferentes " ; such generosity doubtless conceals a trap. 
 New most employers would not deny that one result 
 of profit-sharing is to stimulate production. The offer 
 of the bonus is a lure like the carrot hung before the 
 
266 NEW FALLACIES OF MIDAS 
 
 donkey's nose to quicken its pace ; and the appeal of a 
 higher wage is so strong that few workers can resist it. 
 The question therefore arises whether many indi- 
 viduals may not be tempted to work beyond their 
 srength. High wages are undoubtedly capable of 
 arousing men and women to unnatural efforts. It has 
 not been the call of patriotism alone that has kept 
 many munition workers at the lathe seven days in the 
 week throughout the war ; such excess of energy 
 cannot be healthy, and there is a real danger in the 
 speeding up of production which is always the result 
 and often the avowed object of profit-sharing. When 
 Labour leaders and others are endeavouring to 
 establish a universal eight-hour day, it is fatal to offer 
 high rewards to individuals for working ten or twelve. 
 And, besides all this, it is only fair to enquire 
 how far the employer himself expects to profit by this 
 increase of activity. If for instance ten per cent, is 
 added to the total value of the out-put, by what right 
 should he step in and claim one-half of the addition ? 
 In point of fact, he usually claims more than that ; 
 but taking his share at its lowest, it is hard to see how 
 such a claim can be supported. There is therefore some 
 real ground for the working man's suspicion that one 
 way or another he is going to be " done." It is well 
 within the power of an employer, for example, to 
 manipulate the stock-taking and by keeping prices low 
 to cheat Labour of its true deserts ; or again the 
 apparent generosity of the bonus may often enough 
 work to Labour's disadvantage in the end. For 
 when in due course, the price of living goes up, and a 
 rise in wages becomes due, the master can point to the 
 bonus and pretend that it is the virtual equivalent ot 
 a rise in wages ; whereas in reality it is nothing but a 
 reward for extra service. These and many others are 
 undeniable flaws in the profit-sharing policy. Partly 
 they arise from real difiiculties of organisation and 
 
COMPROMISE 267 
 
 control, but for the most part they are the results of 
 the long standing feud between Labour and Capital 
 and of the distrust and jealousy which that feud has 
 bred. The first step towards a permanent agreement 
 is to dissipate this tainted atmosphere ; and that 
 nothing but good-will and sincerity can possibly 
 achieve. The second step will be to discover some 
 working principle of profit-sharing which will be not 
 only just but agreeable to both parties, and to devise 
 some machinery by which the proportion of the shares 
 may be fixed and from time to time pass under revision. 
 
Chapter XVIII 
 THE NEW FALLACIES OF MIDAS 
 
 (i-) 
 
 Stevenson's Fable of the Four Reformers contains a 
 useful caution against too great zeal for rapid change. 
 When the party of enthusiasts foregathered, each carne 
 provided with a favourite panacea of his own. One 
 wished to abolish Property, a second the Bible, a third 
 the Laws. But the fourth was for no such half 
 measures. " The first step," he said, "is to abolish 
 mankind." And in that paradox Stevenson touched on 
 the heart of the matter. The reformer who begins 
 by pinning his entire faith upon institutions will end 
 by losing his very faith in man. For it is not by 
 institutions that man can be perfected. Change, if it 
 is to come at all, must be change of our own selves ; 
 and we can never hope to be truly happy till we have 
 first become good and wise. The real clue therefore 
 to the economic problem, as to most of the problems 
 under the sun, is not to be sought through Parliaments, 
 or Guilds or Charters, but through the education of 
 the human race. Education can set the world to rights, 
 and nothing else can ; but it must be education in no 
 narrow or academic sense ; it must embrace all man's 
 faculties and train all his powers ; firstly, his body, 
 that he may be strong to labour and to produce wealth 
 in abundance ; secondly, his mind, that he may have 
 skill and science to make his labour yet more fruitful ; 
 last and best of all, it will educate his heart, both that 
 he may know wherein true wealth consists, and that 
 
 268 
 
THE NEW FALLACIES OF MIDAS 269 
 
 he may learn to use rightly the power over his fellows 
 which wealth will put into his hands. For more than 
 all else, it is his false ideals and imperfect sympathies 
 that are the real enemies of his peace ; and not until 
 the law of conscience is become the authentic law of 
 the land will his troubles pass finally away. 
 
 Let us not be deceived. It is no mere pedantry, no 
 fanciful belief in the value of book-learning that sees 
 in education the one sure panacea for the world's 
 ailments. The child is father to the man ; and those 
 who control or superintend the training of the young, 
 hold in their hands the future destiny of the race. 
 In its schools, as nowhere else, the character of a nation 
 is moulded ; and it is by the national character before 
 all that the great movements of history have been and 
 always must be determined. Character founds 
 empires or loses them ; prepares revolutions or sub- 
 mits to tyranny ; and (nowadays at any rate) decides 
 the issues of peace and war. Such things do not happen 
 at haphazard. The nidden springs from which they 
 take their rise are the ideals and prejudices, the fears 
 and aspirations deeply rooted in the national conscious- 
 ness. These spread and propagate with an unseen 
 growth ; but in no soil are thpy more fruitfully 
 implanted than in the adolescent mind. It was the 
 professors and schoolmasters of Germany who sowed, 
 while Europe slept, the tares from which grew War; 
 and if the influence of these men, when directed to an 
 evil purpose, was fraught with consequences so terrible 
 and so momentous, what might it not equally achieve, 
 if employed for the salvation rather than the destruction 
 of mankind ? In England, public education is but 
 half a century old ; and already we can mark the 
 profound effect which it has had upon the welfare and 
 prosperity of our people. It has reduced drunkenness, 
 diminished crime, and raised the popular standards of 
 decency and comfort. We can trace its influence in the 
 
370 NEW FALLACIES OF MIDAS 
 
 demand for better housing and in the greater attention 
 paid by parents to the rearing of their children. That 
 it has awakened a real thirst for knowledge is proved 
 by the vast output of cheap literature, wnich has given 
 us reprints of the Classics at the price of sixpence, and 
 popular handbooks on almost every topic of Science, 
 Politics, and History. In the economic sphere, the 
 results of education are perhaps the most remarkable 
 of all. The habit of life insurance has grown enor- 
 mously among the people. The figures speak for 
 themselves. In 1880 the premiums paid annually 
 amounted to thirteen million pounds ; by 1917 that 
 sum had been multiplied fourfold. The quickening 
 intelligence of the working classes has led to a clearer 
 conception of industrial problems, a stronger deter- 
 rnination for united action, and also a higher sense of 
 their own responsibilities. Not least, it has increased 
 the national efficiency. It has given to millions the 
 training and intelligence which the manipulation of 
 intricate machines and processes demands ; and every 
 year our methods of technical instruction are improving. 
 The soil is now prepared ; we have orly to give the 
 people the opportunities they need and soon their full 
 powers of intelligence and imagination might be 
 brought to bear upon the task which lies before them. 
 Almost within our grasp lies even now such wealth 
 and prosperity as was beyond the wildest dreams of 
 our great-grandfathers ; and were our own eyes fully 
 opened to the possibilities of our future progress, they 
 would be dazzled by its splendour. Only, between us 
 and the land of promise, there still stands, blocking 
 the path, a mountain, as it were, of human folly. 
 Intelligence and imagination can remove that mountain 
 and nothing else can. We need them to overcome old 
 prejudices and false traditions, to abandon our obsolete 
 ana wasteful methods of production, and to inaugurate 
 a second and still more marvellous industrial revolu- 
 
THE NEW FALLACIES OF MIDAS 271 
 
 tion ; we need them to establish harmony between the 
 classes, to make a full end of the foolish and enfeebling 
 antagonisms of the past, and to unite the energies of 
 all in»the achievement of a common purpose. We need 
 them lastly that we may lay wisely the foundations of 
 our future progress, whether by an even-handed dis- 
 tribution of industrial profits and economic power, 
 or by a wise expenditure of public money upon the 
 health of the people, and upon the very education 
 which will give us the qualities of character we need. 
 For the lessons we must learn (let us repeat) though not 
 to be learnt fully indeed in the short years and limited 
 experience of school life, are there at least first to be 
 impressed upon the future citizens of the State ; 
 and it is these early impressions, received at the most 
 impressionable age, which count the most. For this 
 reason we must see to it that the sudden enthusiasm 
 for education to which the war has lately roused us, 
 is not thrown away or misdirected. The call for a 
 more widespread, more prolonged and more effective 
 education is genuine and urgent ; but it is to be inter- 
 preted in the widest and most liberal sense. It must 
 not merely be a call for better technical instruction, 
 which will enable us to hold our own with foreign 
 nations in the race for prosperity or power ; equally, 
 and indeed far more do we require an education which 
 will impart a saner and truer outlook upon life, which 
 will give us the wisdom and the will to solve the 
 thousand problem.s now confronting us at home, and 
 which by upholding new ideals of discipline and duty 
 will achieve here in England victories even more 
 honourable and more permanant than the conquests 
 of trade or war. 
 
 To some thinkers it has seemed that the Industrial 
 Revolution was a mistake, a false step in the world's 
 history. In their eyes the curse of machinery out- 
 weights its blessings ; the ugliness and artificiality of 
 
272 NEW FALLACIES OF MIDAS 
 
 modern life disgusts them ; and so in their search after 
 the secret of what human society should be they would 
 turn back to those free agricultural peoples, on whom 
 the curse has never fallen. In the life of the yeoman 
 farmer or peasant proprietor they see the nearest 
 possible approach to the ideal life ; nor can we deny 
 that there is something of the ideal in the life which 
 such men lead. Owning their property and working 
 for themselves, they find in their task a happiness and 
 satisfaction not known to those who work for hire. 
 Their character, for the same cause, develops a 
 sturdy independence ; they are no respecters of 
 persons ; they recognise no differences of class ; they 
 scorn the servile impotence which would relinquish 
 to others the entire control of public government. 
 Theirs, too, is a life more natural to our kind than the 
 life of the towndweller ; their days are spent in the 
 healthy air ; their minds are attuned to tne beauties 
 and mysteries of nature ; and from their varied task 
 calling as it does for a constant exercise of wits and 
 skill, they gain a shrewd knowledge of both things and 
 men. Seldom indeed perhaps never, has this ideal 
 picture been fully realised in fact.* For all that, we 
 have no right to question that such a society might 
 have been evolved, may even now in some countries 
 be in course of evolution. But for ourselves, when we 
 accepted the alternative of an industrial growth, 
 that ideal ^yas put once and for all behind us ; we can 
 no more retrace our steps or win back our old simplicity 
 of life, than Adam and Eve could recover their inno- 
 cence, when once they had tasted of the tree. And, 
 
 * The ancient civilisations of Greece and Rome perhaps came very 
 near to it ; but then they were built up upon a foundation of slave 
 labour. Chaucer's England gives us another glimpse of its possibilities 
 but even there the back of feudalism was as yet scarcely broken 
 Perhaps the peasant proprietors of modern France have the best claim 
 to have realised the ideal. Certainly they are happy and intelligent 
 industrious and contented ; which is more than can be said of most 
 nations. 
 
THE NEW FALLACIES OF MIDAS 273 
 
 like the apple of that tree. Industrialism has indeed 
 brought with it an attendant curse. We cannot be 
 blind to the blemishes of modern life, the injury to 
 health, the degradation of character, the restless habits 
 and unwholesome morality of our great towns. Worse 
 even than these have been the pernicious by-products 
 of the industrial system, the tyranny of masters, the 
 servile condition of the masses, the accumulation of 
 property in the hands of the very few. It is as though 
 man ha\ing created for his use a vast and powerful 
 engine, had suddenly been caught into its coils, trans- 
 formed as it were into a part of its mechanism, and 
 constrained to slave like a turn-spit dog, to keep the 
 monster in perpetual motion. So immense and com- 
 plex has the organisation of modern industry become 
 tnat it seems to overwhelm and crush out the indivi- 
 duality of men ; for employer and employed alike 
 business has been stripped of its human element ; 
 both are equally the slaves of a soulless system which 
 they must obey or perish. We have lost the old com- 
 pleteness, the poise, the self-sufficiency of life which the 
 agricultural society at least possessed ; and we have 
 paia the price of material prosperity in forfeiting our 
 peace. Yet there is no reason to despair : the step 
 which we have taken has brought difficulties and 
 dangers obvious enough ; but they should not obscure 
 the potentialities which lie behind. The Agricultural 
 Society, we should remember, is of its very nature 
 static ; it has no future and what it is to-day, it will 
 be to-morrow ; and a century hence it will be still the 
 same. The Industrial Society on the other hand has 
 opened out new and inexhaustible fields for human 
 activity. Consider (to name but one or two) how, by 
 means of the railway and the postal services it has 
 multiplied the opportunities of education, social 
 intercourse, and travel, how by the improvement of 
 the printing press it has brought the study of art. 
 
274 NEW FALLACIES OF MIDAS 
 
 literature and science within the reach of all, and (more 
 important still) how by the reduction of working horns, 
 it will soon have furnished all with the leisure to enjoy 
 and profit by them. What further possibilities of 
 social, political and intellectual life the future holds 
 in store, we cannot tell ; but of this we may be certain, 
 that under the sifting test of time the chaff of Indus- 
 trialism will be shed away, and the good seed remain. 
 Man will not remain at the mercy of the system of which 
 he is himself the author ; but his emancipation must 
 come by pressing forward, not by hesitation and regrets. 
 Only further education can complete what education 
 has begun. For the self-same faculties which caused 
 the fatal web to be woven, will prove also the clue to his 
 release, and the mature developments of science and 
 invention will correct the imperfections of their 
 infancy. The dangers of a little knowledge are pro- 
 verbial ; but the proper antidote is more knowledge 
 and not less. So for us there can be no drawing back. 
 If our organisation is at fault, we must better our 
 organisation, not destroy it. If the individual's share 
 therein affords him too small a measure of responsi- 
 bility and freedom, we must train him to deserve a 
 larger. And, as the State's organisation and the 
 individual's efficiency advance from strength to 
 strength, each will react upon the other, the State 
 working more smoothly because it is better served, the 
 individual gaining greater freedom because he has 
 found the part to play which fits him best. And 
 meanwhile as men's interests and sympathies meet 
 upon new points and unite in the common exercise of 
 new activities, not only will the bonds which bind 
 Society together become stronger, more intimate, and 
 better understood, but for each member also there will be 
 ampler means of self-expression and a freer scope in the 
 choice of them. The State, in other words, will be 
 more a State, the individual will be more an individua 
 
THE NEW FALLACIES OF MIDAS 275 
 
 than ever was either before. The Industrial order of 
 Society is no mistaken or chance development ; it is 
 a necessary stage in the ascent of man. Just as the 
 advance from animal to human life involves deeper 
 sorrows and more searching pains, as well as finer 
 pleasures and nobler tastes, so it must be also in the 
 advance from the simpler forms of civilisation to the 
 more complex. Life for the people of the old order 
 was doubtless happy ; but it was limited, partly by 
 its inevitable isolation, partly by its preoccupation 
 with the struggle for daily bread. The society of the 
 future will be more vital, more nervous, more given to 
 introspection, experiencing emotions more subtle and 
 more intense. Will it be happier ? We cannot say ; 
 for its pleasures will be of another quality and its 
 happiness will stand upon a different plane. Is this 
 then progress ? We call it so ; but all we know is 
 that the impulse of our nature compels us to move 
 onward, always adding to our knowledge, always 
 widening our experiences. And once we have tasted 
 the sweets of fuller knowledge and once the horizon of 
 our experience is enlarged, then to return to the old 
 ways of comfortable ignorance is no more possible for 
 us than for man to become a brute again, or for Adam 
 and Eve to recapture the first innocency of Eden. * 
 
 (ii.) 
 
 But, though with the dawn of clearer knowledge, 
 wider sympathies, and fuller powers all the malign 
 influences of economic life will disappear like evil 
 spirits at rising of the day, yet after all the rest are 
 vanished, one obstinate spectre still remains behind. 
 Wherever business is transacted by bargain and 
 
 * The source of future development has been well summarised by a 
 sentence in Mr. Ashbee's book " Where the Great City Stands." " As 
 Hellenic civilisation made the gentleman with the aid of the slave, so we 
 may make the gentleman with the aid of the machine." 
 
276 NEW FALLACIES OF MIDAS .: 
 
 exchange, there competition will also be ; and never 
 so long as buyers buy or sellers sell, can the law of 
 supply and demand be driven altogether from the 
 market place : least of all will it be absent from the 
 Industrial State, where each individual citizen so far 
 from being self-sufhcing, is infinitely dependent upon 
 the activities of others. Values will still vary ; rare 
 gifts, rare services, rare strength still command high 
 prices because the need for them is urgent ; common 
 gifts and common services command low prices, 
 because the supply of them is easy. Nature's Law 
 is stronger than education, stronger even than Demo- 
 cracy, and neither of these can avail to make all men 
 equal, simply because nature has not made them so. 
 The most that they can offer (and in truth it is little 
 enough) will be a fair field for competition, an equal 
 opportunity for all. Competition itself and all that 
 competition involves, not even the strictest Socialism 
 can quite eliminate. However free may be the passage 
 up the ladder of advancement, and however surely the 
 best and ablest may rise towards the top, it is certain 
 that a large proportion must stay very near the bottom. 
 You may democratise the House of Lords, throw even 
 the diplomatic service open to merit ; but you can 
 never make every man an ambassador or a peer. 
 Somebody, in fact, must be satisfied with the meaner 
 and humbler walks of life. There will still be coal to 
 raise, furnaces to stoke, goods to carry, bricks to lay, 
 and so millions of men and women must continue, as it 
 seems, to grind out their souls or exhaust their bodies 
 upon the deadening monotony of such menial labour. 
 You may shorten hours, enliven work, improve 
 conditions ; but the uncomfortable fact remiains that 
 to spend the best part of the day upon an exacting 
 routine of physical labour is not the ideal of what life 
 should be. It may be true enough that many artisans 
 lead happy lives, love their work, and possess varied 
 
THE NEW FALLACIES OF MIDAS 277 
 
 interests and cultivated tastes ; yet no sensible father 
 who was free to name a profession for his son would 
 choose that he should spend his days in heaving coals 
 frorn grimy sacks into suburban cellars or oiling the 
 works of a throbbing thundering machine. Worse 
 still, as though it were not enough that such tasks 
 should be dull and disagreeable, nature has contrived 
 that for the most part they should also be ill- paid ; 
 so that those men who more than any seem to need the 
 compensations of a comfortable home and cultured 
 leisure, are in fact the least able to afford them. For 
 such as these there is but cold comfort in the promise of 
 democracy, if it means no more than one out of every 
 hundred shall win his way to better things. The door 
 may indeed stand open for all comers, but what of that 
 if only those can gain admission who have the strength 
 or skill to force a passage through the crowd ; and 
 what will it profit them that the backstair entrances 
 of birth and privilege shall have been closed, if for 
 the vast majority there still remains the disappoint- 
 ment of failure and exclusion. Dives may be ousted 
 from his heritage of luxury ; and Lazarus be promoted 
 in his place ; but Lazarus' brother beggars who must 
 lie still outside the door, have no special cause to bless 
 the chance which has been offered them only to be lost. 
 When we remember how unequal are the endowments 
 and advantages with which men enter upon life, and 
 how large a number are handicapped or frustrated in 
 the struggle by weak health or lack of recognition or a 
 thousand other checks of unfriendly fortune, we must 
 admit that equality of opportunity can never of itself 
 establish Paradise on earth, and that though its prizes 
 should be drawn without favour or regard, life must 
 still on these conditions remain a lottery to the end. 
 
 So it has seemed to some philosophers that for 
 man, as for the rest of the animal world, life must of 
 its very nature be always a struggle and a conflict, 
 
278 NEV/ FALLACIES OF MIDAS 
 
 seeing that in the modern city, no less than in the 
 primeval forest, it is the fittest and strongest and most 
 capable which survive and flourish ; while the weak 
 go to the wall. These thinkers have declared the law 
 of natural selection to be the only source of all human 
 progress ; for them the hope of the future lies in the 
 triumph of the strong. But while the disciples of 
 Nietsche applaud and welcome the advent of the 
 super-man without thought or pity for the victims of 
 his supremacy, the conscience of mankind has never 
 wholly corsented to this inhuman doctrine, and as 
 civilisation has advanced, it has striven more and more 
 to combat the working of these natural laws and to 
 place itself, as it were, above them. At all times the 
 weak have been able to rely to some extent upon the 
 charity of individuals, but with the gradual awakening 
 of the social conscience, organised justice has begun 
 to take the place of haphazard philanthropy, and public 
 legislation, dealing with whole classes rather than with 
 isolated cases, is busied in helping those who cannot 
 help themselves. The poor, the sick, the unfortunate, 
 are in part at least supported out of the pockets of the 
 rich ; even the idle ne'er-do-well receives his share of 
 bounty, and in a hundred ways we endeavour to redress 
 the unequal dispensations of Providence by artificial 
 means. But though much has indeed been done, yet 
 much remains to do. The idealist at least can never 
 be satisfied this side of Utopia, and we must needs look 
 forward (how far into the future none can say), to the 
 perfect society in which man's victory over nature will 
 be final and complete. There the individual will not 
 merely be indemnified against the grosser injustices of 
 fortune ; his right to share with others in the good 
 things of life will be permanently and incontestably 
 assured. All can not perhaps be equally happy, but 
 there will be an equal opportunity of happiness for 
 alL Now though circumstances alone cannot bring 
 
THE NEW FALLACIES OF MIDAS 279 
 
 happiness, yet happiness is for most of us very depen- 
 dent upon the outward circumstances of life. Except 
 for a Diogenes or a Francis, a decent standard of 
 material comfort is the first condition of contentment. 
 But to be well fed and well clothed is not enough ; a 
 mail's soul may be starved while his body prospers, and 
 for the fullest and highest development of his powers 
 and personality (which alone is the secret of true 
 happiness) he will also require some possession of 
 material wealth. Does his taste incline to intellectual 
 pleasures, he will need books ; or to aesthetic, he will 
 need pictures or music. If he lacks the means, he 
 cannot travel nor pursue a favourite hobby ; he cannot 
 enjoy to the full the society of friends without the 
 resources of hospitality, nor the companionship of the 
 family without the proper conveniences of home. 
 These are some of the avenues and means to a full self- 
 realisation ; in which if we would be fair to others and 
 honest with ourselves, we can allow of no monopoly ; 
 and in the ideal society at least the right of them can 
 hardly be denied to any human being. It used once 
 to be the fashion to pretend that the poor are happier 
 as they are, that education would be wasted on them, 
 and that the pleasures of intellect and art and beauty 
 can have no place whatever in their lives. To-day such 
 foolish platitudes are out of date ; and anyone who 
 has had experience of the working classes (especially 
 perhaps of the working classes of our northern towns) 
 knows them to be false. If the rich man's son is 
 happier and better and more useful for the wider 
 outlook and more liberal tastes which his wealth and 
 education give him, the poor man's son may be so too ; 
 and in the future, whatever may be the character of 
 our Utopia, this one thing at least must be secured 
 for each and all without distinction, an equal oppor- 
 tunity with others for getting from life the best that 
 life can give them. No system will satisfy an 
 
 19 
 
28o NEW FALLACIES OF MIDAS 
 
 enlightened and Christian democracy which does not 
 make it ultimately possible for every child born into the 
 world to realise his best and highest self. Life then 
 in the ideal Society, will offer much more to a man 
 than the precarious hope of drawing a winning ticket 
 in the lottery of fate. His right to happiness will not 
 depend on his own ability to fight his way to the fore ; 
 rather will it be the inalienable privilege of his man- 
 hood, permanent and secure to him whatever his rank 
 or his work or his capacity. No man can do better 
 than his best ; and provided that according to his 
 powers he serves the community faithfully and well, 
 every labourer will be worthy of his hire ; to the 
 chimney sweep sweeping his chimneys, or to the road- 
 mender mending his roads, no less than to the merchant 
 in his counting house or the judge upon his bench, there 
 will be an opportunity of enjoying whatever may make 
 life for him a life indeed worth living. 
 
 But it will be long years yet before the Golden Age 
 of fable can come back again to earth ; and such a 
 state of society as we have pictured is not to be estab- 
 lished in a day. The zeal of the Socialist who would set 
 up the Commune, and enforce equality by law,* is 
 
 * Much has happened since these hnes were written ; and the 
 equaUtarian state can now no longer be considered as a mere castle in 
 the air. War, the great leveller, has given us a foretaste of its appli- 
 cation ; and what once seemed the fantastic dream of communists, 
 has been translated by the Food Controller into concrete fact. For 
 the first time perhaps in history rich and poor have stood on an equal 
 footing as concerns the chief necessities of life. Tea and sugar, meat 
 and margarine have been distributed without regard for wealth, quality, 
 or condition. The experiment has of course been limited and incom- 
 plete : it has touched but one side of economic life : nevertheless 
 it has done much more than simply to tide over an awkward situation. 
 It has established a precedent. What legislation can achieve in war, 
 it can also maintain in peace : and who shall say whether the masses, 
 having once tasted the benefits of an enforced equality, will lightly forgo 
 the opportunity of its perpetuation ? Such a course appears in the last 
 degree unlikely : for it is out of keeping with the English character : 
 but now at least if never before, it has become practical politics. The 
 reproach of Communism has been done away, and it demands even if it 
 does not deserve our serious consideration. 
 
THE NEW FALLACIES OF MIDAS 281 
 
 dangerously misplaced, and however much we may 
 sympathise in his aspiration for the end, we cannot but 
 condemn the means. For the remedy of Communism 
 must be ineffectual, simply because it is too complete. 
 It cuts the knot of the problem, it is true, in the simplest 
 possible fashion, rectifying inequality by destroying 
 competition, defeating Nature by defying her. But 
 it is not so that Nature can be treated with impunity. 
 We may submit to her as our mistress, or tame her as 
 our slave, but we cannot banish her altogether from 
 the world. To accomplish man's perfection, we must 
 first accept him as he is, recognise his temptations and 
 his weaknesses, and meanwhile remember that the 
 same impulse which drives him to the Devil, may 
 equally prove the salvation of his soul. Virtue and 
 vice are only opposites in so far as they are the right 
 use and the wrong use of the same thing. To convert 
 man s weakness into strength, to guide his natural 
 impulses from wrong channels into right, that is the 
 true task of the reformer ; but to ignore altogether 
 the existence of those impulses, is no less dangerous 
 than it is absurd ; as well might the man who designs 
 an aeroplane omit the law of gravity from his calcu- 
 lations. This, then, is the Communist's (and in a lesser 
 degree the Socialist's) mistake, that he undertakes to 
 alter human nature by the simple but foolish process 
 of pretending that it is other than it is. In the attempt 
 to make the individual happy he would end by making 
 him something which was not an individual at all. 
 For the essence of individuality lies in a man's right 
 to realise his self in his own way. A man must be his 
 own keeper before he is his brother s, and his ideals are 
 for himself alone to form. Now tastes differ ; one 
 man's meat is another man's poison ; Mary listens 
 while Martha serves. There are, broadly speaking, 
 two types of men in the world ; one which is ambitious 
 for material wealth and will work night and day to get 
 
282 NEW FALLACIES OF MIDAS 
 
 it, another which has no such anabition, but prefers 
 moderate wealth conabined with leisure to the alter- 
 native of luxury and toil. Both are legitimate ideals, 
 but Communism demanding equality of rewards and 
 equality of service, could tolerate neither ; the man of 
 the first type must devote the hardwon profits of his 
 industry to the common stock, and himself gain no 
 direct advantage ; the second must sacrifice his love 
 of leisure ; and bear his full part in the burden of pro- 
 duction. In short, the ideal of complete equality could 
 only be practicable in a community of saints or slaves. 
 The fundamental instinct of the normal human being 
 rebels against such a system. For him the end and 
 purpose of all effort is the satisfaction of desires ; and 
 while he does not expect to receive where he does not 
 give, neither is he inclined to render services without 
 the expectation of rewards, and rewards too that are 
 proportionate to the service. Communism is against 
 the grain of our nature ; we do not wish to have all 
 things in common with our neighbours, not because we 
 grudge them a share in what is ours, but because we 
 want it to be ours before it becomes theirs ; so any 
 attempt to standardise mankind, to support one class 
 by the exertions of another, to penalise the efficiency 
 of Peter in order to indemnify the inefficiency of Paul, 
 is bound ultimately to fail. For, as in medicine cures 
 can only be effected through obedience to physical 
 laws and it is a dangerous experiment to treat a diseased 
 limb by draining the vitality of the other members, 
 so in economics health is to be sought not by working 
 against nature, but by working with her. She is a good 
 ally, but a bad enemy ; for she never fails to conquer 
 in the end. Competition is her own method of selec- 
 tion ; and no other can permanently take its place. 
 Ana, if we believe that Nature knows best hov\^ to fit the 
 individual to his proper function, we must also trust her 
 power to make that function worthy of his humanity. 
 
THE NEW FALLACIES OF MIDAS 283 
 
 (iii.) 
 
 Though man audaciously proposes, man does not 
 himself dispose. Philosopl ers may philosophise, 
 reformers may preach reform, and legislators pass their 
 laws ; but it is not from these that great changes take 
 their origin ; it is from the deep elemental forces, often 
 incalculable, and for the most part incontrollable, 
 which drive us onward along the road of destiny. 
 The reformers themselves are after all but the mouth- 
 piece through which is expressed the deep and inarti- 
 culate impulse of the race. The laws are nothing 
 more than the visible embodiment of a popular instinct 
 or the outward acknowledgment of some pressing need. 
 It was the Renaissance and not Luther that made the 
 Protestant religion ; England passed the Reform Bill 
 and not the House of Commons; or again, if we ask 
 what has been the chief cause of the growth of tem- 
 perance in modern England, it is not the propaganda 
 of teetotalers, but the general spread of education which 
 has introduced new pleasures and fresh interests to 
 counteract the lure of drink. So, if we try to forecast 
 the economic future and to discern by what process 
 a remedy may be found for the unequal distribution of 
 the world's wealth, we shall seek it, not so much among 
 the Statute books of posterity, or in the progress of 
 Socialistic legislation, but rather io the natural develop- 
 ment of economic forces. About that development 
 there can, it is true, be no certainty at all : what 
 external influences may intervene to change the course 
 of history, we cannot tell ; it may be that out of the 
 ruin and ^havoc of the European war there will arise 
 such stern necessity for co-operative effort as will force 
 some kind of Socialism upon us. But if the more 
 natural process of selective competition still continues 
 to hold the field (and as we have seen, competition 
 cannot be wholly eliminated without an almost 
 
284 NEW FALLACIES OF MIDAS 
 
 intolerable suppression of the individual's will), then 
 it is not contrary to reason that we should look to these 
 natural laws for ultiraate salvation, and it may even be 
 that the same conditions which in the past have caused 
 such inequalities of distribution, such wide divergencies 
 of poverty and wealth, will in the future tend to produce 
 the very opposite result. 
 
 All such prophecy is admittedly guess-work ; but 
 if the guess is worth the making, the manner of the 
 change will be briefly this. If one thing is certain in 
 the future, it is that with the advance of science, 
 industrial efficiency will very rapidly improve, and as 
 processes become more elaborate, it is clear that a 
 larger and larger proportion of the world's production 
 will be effected by machines. As the call for skilled 
 mechanics or semi-skilled machine-minders increases, 
 the call will easily be met by a corresponding increase 
 of educational facilities. Already we have discovered 
 (especially during the course of the war itself) that it 
 now needs no extraordinary or superior intelligence 
 to handle a lathe or even to operate an intricate 
 machine. Women with a bare six month's experience 
 have undertaken functions which hitherto have been 
 jealously regarded as the prerogative of the highly 
 skilled workman. So, long before the progress of 
 scientific production has reached its full development, 
 it will be found that the large mass of unskilled workers 
 now employed upon purely manual labour, will have 
 been absorbed into the ranks of the skilled or semi- 
 skilled. Now, when that has happened, there will none 
 the less reniain some tasks whicn still require nothing 
 but brute strength or naere application without 
 intelligence. But when the nation is mainly com- 
 posed of educated men and women, when the wastrel 
 has almost disappeared and even inefficiency is rare, 
 there will be little competition for such jobs. The 
 time may come when it is more difficult to find a man 
 
THE NEW FALLACIES OF MIDAS 285 
 
 to sweep a crossing or clean out a drain than to mind 
 a spinner or a printing press. In fact the casual 
 labourer will be as scarce as he now is common. And 
 when that time is reached, the inevitable result will 
 follow. The action of economic law is not to be denied. 
 As the supply of skilled workmen becomes abundant, 
 exceeding the demand, the reward of skilled labour 
 will diminish, while on the other hand, the reward of 
 the unskilled labourer who is hard to come by, will 
 correspondingly increase. And just because skilled 
 labour (involving as it does a higher exercise of human 
 faculties) is more interesting, more dignified and for 
 the most part more pleasant than unskilled labour, 
 it will lemain more popular even when it is less highly 
 paid. Already we can see to-day how many men 
 prefer the meagre salary of the clerk or the elementary 
 school teacher to the comparative opulence of a pit 
 hand or a mechanical engineer ; and if the " black- 
 coated " professions continue to attract men in spite 
 of their financial disadvantages, we may be sure that 
 the same will hold true of skilled as against unskilled 
 labour. Even in professions of a higher rank, a similar 
 result will follow. When there are as many men 
 competent to fill the manager's chair as there now are 
 to sweep out his office, it is pretty certain that the post 
 will be less remunerative than it now is. In short, 
 there will be established a kind of equipoise between 
 the various grades of labour ; there will be a more 
 general diffusion of prosperity and the reward of differ- 
 ent services will in some measure be equalised for the 
 simple reason (and it is the only sound reason for 
 equality) that the demand and supply of those services 
 will be equal too. 
 
 Thus the whole scale of values, as we know them, 
 will have undergone a revolutionary change ; and yet 
 in the new scale there will be no injustice. The material 
 reward of the more intelligent and energetic will it is 
 
286 NEW FALLACIES OF MIDAS 
 
 true be less ; but their real reward will lie in the superior 
 character of their activities. For the man whose work 
 is interesting and pleasant, his work will be its own 
 reward ; nor will he grudge the man whose work is 
 unpleasant and monotonous the merited compensation 
 of a higher wage, and a fuller enjoyrnent of the 
 material benefits of life. And so with this revolution 
 in money values there will come a transformation of 
 ideals too. Men will begin to value their work and their 
 profession for its own sake rather than for its financial 
 rewards. Instead of seeking the most profitable job, 
 they will prefer that which best suits their ability and 
 tastes. Competition will no longer be a senseless 
 struggle after material wealth, and a vain pursuit of 
 imaginary advantages, which in the toil and hurry of 
 getting we have scarcely the zest or leisure to enjoy. 
 It will rather be a sane and healthy rivalry for the 
 enjoyment of those callings and activities which can 
 best enable men to realise their highest faculties and 
 fullest powers. And in the day when that transforma- 
 tion is accomplished, we shall not be far distant from 
 the Kingdom of Utopia. 
 
 The truth is that with the hey-day of a new-found 
 prosperity our sense of proportion has been blurred ; 
 and in the warped vision of the modern world the old 
 fallacy of Midas is re-enacted. Blinded by the false 
 glitter of our own good fortune we have forgotten that 
 material wealth (like Midas' gold) is not an end to be 
 pursued for its own sake, but a means to an end beyond 
 itself. That end is the development of human person- 
 ality. Riches have indeed their value ; for they form 
 the very basis of civilised existence ; but it is a 
 secondary value. If we put them in the forefront of 
 ambition, we are mistaking the purpose for which 
 life was given us. Stevenson once said, that to be 
 wholly devoted to some intellectual exercise, is to 
 have succeeded in life. That is a partial and 
 
THE NEW FALLACIES OF MIDAS 287 
 
 exaggerated summary of life's purpose ; but at least 
 it sets a right emphasis where emphasis is due. True 
 success is not to be measured by what a man is worth 
 according to the financier's reckoning, nor even by 
 what he has achieved (though that is a worthier 
 standard), but simply by what he is. Material 
 possessions or practical activities are nothing except 
 as they contribute to the building of a man's character 
 and as they serve to promote his genuine happiness and 
 welfare. True wealth in short does not lie within the 
 narrow limits of material satisfactions ; it is the sum 
 total of life's opportunities, not those opportunities 
 alone which can be bought with money, but also those 
 which his work and his leisure bring him. He is rich 
 or poor according as these are great or small. He 
 succeeds or fails according as he uses them well or 
 uses them badly for the fullest realisation of the best 
 that he can be. Man can no more satisfy the cravings 
 of his spirit by the increased output of factories or the 
 scientific exploitation of the world's resources than 
 Midas could satisfy his bodily hunger upon gold. 
 
 That is one lesson that we may learn from the old 
 fable ; and there is another; — that just as for Midas 
 there was no short cut to fortune through the freak of 
 a fairy-tale wish, so we must expect no miracle of 
 reform or legislation to end all our troubles in a night 
 time. Before the world can shake free from the 
 entanglements of circumstance into which its own 
 misguided policies have brought it, the ancient truth 
 which Midas had forgotten must be understood anew. 
 For we too are in danger of forgetting that, while man 
 may make nature serve him, he must still in a sense 
 remain her slave. Effort is the only road to success 
 which she will recognise. Struggle is the stern necessity 
 which she has laid upon man ; and man must bow 
 to her decree. So long as individuals preserve their 
 individuality at all, it is inevitable that there should be 
 
288 NEW FALLACIES OF MIDAS 
 
 rivalry between them. Destroy competition and the 
 salt is taken out of life ; impose an artificial equality 
 upon a people and the mainspring of their progress 
 will be gone. Rivalry there must be both now and 
 always. But let it be rivalry for noble ends ; not a 
 blind conflict for a barren supremacy of gain ; let each 
 expect his recompense no less from his work than from 
 his wage ; let him honour the privilege of service no less 
 than he prizes the material benefits of success ; and 
 then as the race rises to the fulness of its powers, we 
 may have good hope that nature's own method of 
 competitive selection will turn to man's advantage, 
 and that for the weakling and the dunce no less than 
 for the strong and clever there may yet be found the 
 opportunity of a worthy life and a full and generous 
 share in life's good things. 
 
 For to believe in man's future is to have faith also 
 in something greater and stronger than man. If he is 
 indeed something better than a pawn in the hands of 
 Fate, and if his life is something more than a gamble 
 with blind chance, then we must believe that the Power 
 which does not overlook the falling of a sparrow, will 
 surely take thought also for the happiness of the 
 individual no less than for the progress of the race. 
 Nature may seem often cruel and callous, exulting in 
 the war between her creatures and careless of the 
 single life. But if we believe at all in the essential 
 goodness of the divine purpose, we must needs believe 
 also that men are meant to be happy in this world, and 
 that out of the clash and contraiety of human interests 
 some means of reconciliation can be found. When we 
 feel that amid all our perplexities and troubles we are 
 moving to the consummation of a perfect plan, it is 
 something more than the pious fancy of orthodox 
 religion that is the earnest of our faith. In the laws 
 of our own nature we discern the hand of God. In the 
 observance of those laws we know that all human 
 
THE NEW FALLACIES OF MIDAS 289 
 
 happiness consists ; obeying them we reap the fruits 
 of harmony and health ; disobeying we fall into strife, 
 suffering and decay. And because in these laws is 
 contained some promise of an ultimate perfection, to 
 discover and to observe them is the whole duty of man. 
 Only when the call of whatever is highest and noblest 
 in our being has been heard and answered will 
 Society enter at last upon that peace in which the 
 diversity of its members shall be blended in a perfect 
 unity, and the power to lead a worthy, full and happj^ 
 life shall be the universal birthright of mankind. 
 
INDEX 
 
 Activity, a form of work, 21. 
 
 Adventure, spirit of financial,226. 
 
 Advertisement, wasteful use of, 
 52. 
 
 Agriculture, 185, 241. 
 
 Agricultural civilisation com- 
 pared with industrial, 272. 
 
 American methods of production 
 and management, 54, sqq. 
 
 Appetites, insatiability of human, 
 36. 
 
 Apprentices, statute of, 133. 
 
 Aristocracy, power of, 184. 
 
 Aristotle, 15. 
 
 Armaments, wasteful, 49. 
 
 Ashbee, 275. 
 
 Askwith, Sir George, 138. 
 
 Athens, lack of dra-inage, 39. 
 view of labour, 15, 206. 
 State theatre, 260. 
 
 Australia, industrial arbitration, 
 147. 
 
 Bargaining, between rich and 
 poor, 106. 
 
 liberty of, 214. 
 
 temptations of, 51, 
 Belgium, population of, 34. 
 Belloc, Hilaire, 186, sqq. 
 Benefit funds, 136. 
 Bethlehem steel works, 56. 
 Black death, 108. 
 Bolshevist, 260. 
 Bounties, state, 126, 240. 
 Boy Scouts, 23. 
 Briand, 167. 
 Bright, John, 117. 
 Bureaucracy, 67, 168. 
 Burns, John, 135, 150, 184. 
 Business methods, see Commerce. 
 Business firms, increasing size of, 
 245- 
 
 Capital, definition of, 27. 
 
 examples of, 24. 
 
 monopoly and competition in, 
 105. 
 
 self -productive, 105. 
 
 uses differ in value, 30. 
 
 to be shared by workers, 254. 
 
 to be hired by Labour, 259. 
 Capitalist, advantage over work- 
 men, 106. 
 
 lack of sympathy with workers, 
 III. 
 
 natural function, 243. 
 
 place in future, 257. 
 
 power of, 104 sqq. 
 
 value of, 224. 
 Ca' canny, 145. 
 Cain, Tubal, 17. 
 Caxton, 19. 
 Character, importance of 
 
 national, 269. 
 Charity, 187. 
 Chartists, 159. 
 Chesterton, 211. 
 Chinese mandarin, 13. 
 Christian ethics, 119, 130, 166. 
 Cobden, 117. 
 Coles, G. D., 202. 
 Collectivism, 150, 217. 
 
 represents cor.sumers' mterest, 
 161. 
 Combination laws, 133. 
 Combination equivalent to 
 
 monopoly, 92. 
 Commerce, molality of, 88, 122. 
 Commission, Royal, 135. 
 Communism, 75, 157, 165. 
 
 unnatural, 280. 
 Competition compared with 
 monopoly, 91. 
 
 inevitable, 276. 
 
 nature's method, 282. 
 
 290 
 
INDEX 
 
 291 
 
 remedy- for stagnation, 228. 
 
 Ruskin's; views of, 120. 
 Complexity of modern life, 21. 
 Compromise in industry, 234. 
 Conciliafon between Labour 
 
 and Capital, 146. 
 Conditions in workshop, 147. 
 Confiscation proposed by 
 
 Socialists, 162. 
 Conscription, Industrial 215. 
 Consumer protected under col- 
 lectivism, 161. 
 
 and producer, 47. 
 Consumption and investment, 25. 
 
 and production, 127. 
 Co-operation, 76. 
 
 the spirit of the age, 115. 
 
 the keynote of Socialism, 166. 
 Co-operative Society of Con- 
 sumers, 173. 
 
 membership of, 174. 
 
 wholesale enterprise, 175. 
 
 productive enterprise, 175. 
 Co-partnership, 249. 
 Corn production in England, 34. 
 Corn Laws. 116, 
 Cotton trade, 245, 256. 
 Custom, its influence on bargain- 
 ing, 86. 
 
 Demand and supply, 83, 123. 
 Desires, progressive increase 01, 
 
 36. 
 Discipline of workshop, 246. 
 Division of labour, 18. 
 Drink index of wealth, 117, 283. 
 
 Earth, source of all wealth, 10. 
 
 Education, 67, 268, 271. 
 
 Educational Association, Work- 
 ers', 73. 
 
 Efficiency, 172. 
 
 Employees, see Labour. 
 
 under Co-operative Societies, 
 179. 
 
 Employers, see Capitalist. 
 
 Employers' Liability Act, 137, 
 189. 
 
 Engineers, 147. 
 
 Equalitarian state, 280. 
 
 Equality of opportunity 276. 
 
 Ethics of commerce, 129. 
 Exchinge inevitable to-day, 87. 
 Expropriation, 162. 
 
 Fabian Society, 160, 178. 
 Family, 213. 
 Feudalism of land, 95. 
 
 of industry, 149. 
 Food control, 280. 
 Fourier, 157. 
 Freedom, 66, 210. 
 Free trade, 114, 242. 
 French character, 197. 
 
 labour movement, 198. 
 
 syndicalism, 152. 
 
 Gas, 162. 
 
 George, Henry, 100, 159, 
 
 George, Lloyd, 42, 171. 
 
 Germans, 65, 172, 269. 
 
 German kartels, 140. 
 
 Gold not in itself wealth, 8, 81. 
 
 fluctuations in value, 81. 
 Greeks valued simplicity, 69. 
 
 view of work, 15, 206. 
 Guilds, mediaeval, 99, 104. 
 Guild Socialism, 209 sqq. 
 
 Handicrafts, 70. 
 Hardie, Keir, 150. 
 Hood, Thomas, 71. 
 Houses, 224. 
 Hyndman, 160. 
 
 Income, average of national, 233. 
 probable increase, 233, 252, 
 256, 270. 
 Independent Labour Party, 160. 
 Individual and State, 274. 
 Individualism, 114, see Man- 
 chester school, 
 justification of, 237. 
 services of, 221. 
 theories of, 259. 
 Industrial Revolution, 133, 271. 
 drives populations into towns, 
 
 96. 
 effect on capitalist, 113. 
 effect on poor, 106. 
 effect on wages, 109. 
 Industrial state com paired with 
 agricultural, 272, 
 
292 
 
 INDEX 
 
 Insurance Act, 137, 171. 
 Insurance, Life, 270. 
 International Working Men's 
 
 Association, 159. 
 Investment, 105. 
 
 and consumption, 25. 
 
 by workers, 255. 
 Ireland, free land in, 99. 
 Iron industry, 263. 
 Isolation, effects in middle ages, 
 93- 
 
 Jingoism, 208. 
 Johnson, Doctor, 55. 
 
 Kartels in Germany, 140. 
 
 Labour, see Work. 
 
 Labour and Capital see Capital. 
 
 Labour, ill-paid, 128. 
 
 exploited, 148, 204. 
 
 to hire capital, 259. 
 
 unorganised, 194. 
 Labour party, 136, 160. 
 
 and Co-operatives, 176. 
 Labour Party, Independent, 160. 
 Labour colony, 189. 
 Land, monopolies of, 95. 
 
 in Colonies, 96, loi. 
 
 in Ireland, 99. 
 Landowners, dispossession of, 163. 
 Law against combinations, 133. 
 
 Agricultural, 123. 
 
 Corn, 116. 
 Legislation, class, 189. 
 Leicester stocking makers, 117. 
 Leisure, 22, 72. 
 Liberty, 171, 210. 
 
 to bargain, 214. 
 
 to save, 216. 
 Lock-out, 139, 239. 
 Losses to be shared by workers, 
 
 254- 
 Luxury, 39. 
 defence of, 40. 
 arguments against, 42. 
 
 Macdonald, Ramsay, 160. 
 Manchester school, 113, 207, 217. 
 
 not opposed, 116. 
 Machinery, William Morris 
 condemns, 70. 
 
 Machine-minding, 71, 284. 
 
 Majority, rights of, 209. 
 
 Mallock, 233. 
 
 Malthus, 33. 
 
 Man, primitive, 16. 
 
 Management, scientific, 55. 
 
 Manager in business, 244. 
 
 Mann, Tom, 135, 150. 
 
 Marx, 158. 
 
 Mercantile marine, 215, 238, 
 
 239. 
 Milk, 242. 
 
 Mill, John Stuart, iii. 
 Milton, 124. 
 Mines, 238, 239. 
 Minimum wage, 125, 143. 
 Ministry of Agriculture, 185. 
 
 of Munitions, 144. 
 Money absent in Utopia, 75. 
 
 measure of value, 81. 
 
 necessary, 87. 
 Money, Sir Leo Chiozza, 241. 
 Monopoly, 91 sqq. 
 
 limits of, 94. 
 
 of capitalist, 148. 
 
 of combined strikes, 132. 
 Monopolies, natural, 228, 238. 
 Morality in commerce, 88, 122, 
 
 129. 
 More, Sir Thomas, 59, 60. 
 Morris, William, 60, 160. 
 Miinsterberg, 57. 
 
 Natonalisation of railways, 
 
 mines, etc., 151. 
 Nationality, spirit of, 77. 
 
 despised by Syndicalists, 152. 
 Natural monopolies, 228, 238. 
 Nature, her part in production, 
 II. 
 
 rejects communism, 280. 
 Necessities and luxuries, 39. 
 Non-Unionists, 141 sqq. 
 Norwich, 150. 
 
 Officialdom, 168. 
 Opportunity, equality of, 276. 
 Organisation of labour, 18. 
 
 of Masters, 140. 
 
 of Trade Unions, see Unions. 
 
INDEX 
 
 293 
 
 Overtime, 143. 
 Owen, Robert, 159. 
 
 Pensions, Old Age, 137. 
 
 Pericles, 69. 
 
 Philanthropy and business, 262. 
 
 Picketing, peaceful, 141. 
 
 Piece-work, shop, 251, 264. 
 
 Plato, 40, 59. 
 
 Political economy criticised by 
 
 Ruskin, 119. 
 Political development, economic 
 
 analogy with, 258. 
 Poor, conflict with Capital, 106. 
 Population, increase of, 34. 
 
 shifts to towns, 96. 
 Post Office, 162, 167, 238. 
 Prices, fair, 87, 128. 
 Primitive man, 16. 
 Production and consumption, 127, 
 129. 
 
 means of, 103, 149. 
 
 sources of, 10, 103, 149. 
 Production, industrial, 
 
 future increase probable, 254 
 
 maintained by women, 20. 
 
 speeding up of, 266. 
 Profits, industrial, 248. 
 Profit-sharing, 249, 263. 
 Property a stimulus to indi- 
 viduals, 169, 255. 
 Protective tariffs, 126. 
 Railways, effects of first, 116. 
 
 nationalisation of, 151, 169. 
 
 strike, 245. 
 
 waste on, 54. 
 Redistribution of wealth, 219 
 
 233- 
 Rents in towns, 97. 
 Retail trade, 54, 55. 
 Revolution, French, 157. 
 
 Industrial, see Industrial Revo- 
 lution. 
 
 Russian, 154. 
 Ricardo, 98. 
 
 Rochdale Co-operators, 174. 
 Rosebery, Lord, 178. 
 Ruskin, 22, 72, 118 sqq. 
 Russia, drink, 49. 
 
 population, 33. 
 
 revolution, 154. 
 
 Sabotage, 146. 
 
 St. Simon, 157. 
 Science, use of, 104. 
 Scientific management, 55. 
 Scottish Co-operative Society, 
 
 181. 
 Self-expression in work, 14. 
 Self-government in workshop, 
 
 246. 
 Selfridge, Gordon, 247. 
 Self-sacrifice, 232. 
 Shaftesbury, Lord, 117. 
 Shop piece-work, 251, 264. 
 Simplicity of life, 68, 74. 
 Skill as basis of value, 123. 
 Skilled workers, 284. 
 Slavery, industrial, 204. 
 Smith, Adam, iii, 134. 
 Socialism, 156 sqq. 
 
 advantages, 165. 
 
 and Co-operative method, 174. 
 
 a result of the war, 185. 
 
 criticised, 211 sqq., 280. 
 
 justified in part, 237, 259. 
 
 life under, 230. 
 Socialism, Guild, see Guild 
 
 Socialism. 
 Spain and gold, 8. 
 Spartans, 231. 
 State and individual, 217, 274. 
 
 bounties, 240. 
 
 interferences, 239, 243. 
 
 identical with people, 200. 
 Statute of apprentices, 133. 
 Stephenson, Robert Louis, 268, 
 
 286. 
 Stockholm, 159. 
 Strike, 132, 239. 
 
 against Sociahst Government, 
 167. 
 
 Dock, 135. 
 
 in 1912, 151. 
 
 Railway, 197, 245. 
 Supply and demand, 83, 276. 
 
 criticised by Ruskin, 120. 
 Syndicalism, 132, 197. 
 
 advantages, 222. 
 
 justified in part, 237, 259. 
 Syndicat, 132. 
 
 Sweden, employers and em- 
 ployees, 139. 
 
294 
 
 INDEX 
 
 Swift, Dean, 33. 
 
 Taff Vale decision, 137. 
 Taylor, James, 55. 
 Telegraphs, 238. 
 Telephone, 162, 168. 
 Temperance, 283. 
 Thrift, 172. 
 
 Times, quoted, 143, 194. 
 Trades Unions, see Unions 
 
 Congress, 150. 
 Trusts, 92. 
 
 Unearned increment, 97, 
 Unemployment, 108. 
 
 benefit, 191. 
 Unions, Trades, amalgamation, 
 140. 
 
 disadvantages, 144. 
 
 membership, 135, 139. 
 
 old Unions, 134, 150. 
 
 oppose profit sharing, 264. 
 
 record good and bad, 205. 
 United States, see America. 
 Unproductive labour, 49, 
 
 Value, money as a basis, 81. 
 
 skill as basis, 123. 
 
 will be transformed, 285. 
 Vodka, 49. 
 
 Voters' power under Socialism, 
 167. 
 
 Wages, just, 87, 128. 
 
 minimum, 125 sqq., 145, 240. 
 
 standardisation of, 122, 215. 
 Wallas, Graham, 14. 
 War gives power to workers, 153. 
 
 wealth of rich increased by, 
 184. 
 Waste of effort, 56. 
 Wealth defined, 9. 
 
 probable increase after War, 
 
 254- 
 redistribution of, 219, 233. 
 Wells, H. G., 59, 68, 193. 
 Witley Report, 245. 
 Women in industry, 125. 
 
 maintain output during war, 
 20. 
 Work, complexity of modern, 
 21. 
 love of, 13. 
 manual, 15. 
 
 necessary to production, 11. 
 right to, 12. 
 unproductive, and productive, 
 
 47- 
 Workers, see Labour. 
 
 Educational Association, 73. 
 
 Zimmern, A. E., 69. 
 
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