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Monday, June 11, 2012


Foundation of Economic Education


  Benjamin F. Fairless

  Karl Marx completely rejected the only economic system on earth under which it is possible for the workers themselves to own, to control, and to manage directly the facilities of production. And shocking as the news may be to the disciples of Marx, that system is capitalism!

  Here in America, ownership of our biggest and most important industries is sold daily, in little pieces, on the stock market. It is constantly changing hands; and if the workers of this country truly wish to own the tools of production, they can do so very simply.

  They do not have to seize the government by force of arms. They do not even have to win an election. All in the world they have to do is to buy, in the open market, the capital stock of the corporation they want to own—just as millions of other Americans have been doing for many decades.

  Now I imagine that some persons may say: “Oh, that’s all very good in theory; but, of course, it isn’t possible in practice. No group of workers could ever purchase the great multibillion dollar corporations that we have today.”

  Well, the other day I did a little simple arithmetic. The results may be as amazing to you as they were to me. At today’s market prices, the employees of U. S. Steel could buy every share of the outstanding common stock of the Corporation just as easily and just as cheaply as they can purchase one of the higher-priced automobiles.

  We have approximately 300,000 employees. That is not just steelworkers, of course. It is all our workers—including me. And together, they could buy all the common stock of the Corporation by purchasing just 87 shares apiece. At today’s prices, the total cost of 87 shares is less than $3,500. And at today’s wages, the average steelworker earns that much in approximately ten months.

  Ten Dollars

  By investing $10 a week apiece—which is about what our steelworkers gained in the recent wage increase—the employees of U. S. Steel could buy all of the outstanding common stock in less than seven years; and—except for the relatively small fixed sum that is paid in dividends on the preferred stock—our employees would then be entitled to receive all of those so-called “bloated profits” they have heard so much about. But here, I’m afraid they would be in for a disappointing surprise. At current rates, the total dividend on 87 shares is only $261 a year.

  But in order to control U. S. Steel, the employees would not even have to purchase 87 shares apiece; they would need only to purchase enough of the stock to give them a voting majority. Then they could elect their own Board of Directors, fire the present management, put their own president in my job, and run the business to suit themselves.

  Before they become too overjoyed at this prospect, however, they should be warned that they still would not be their own bosses; for the true bosses of every American business are its customers. And unless those customers are satisfied as to the quality and price of the product, there will be no business and there will be no jobs. But as long as the new owners of the company could keep the customers happy, they could run the show exactly as they pleased.

  If the workers of America ever did own the tools of production, all of us would quickly learn a few fundamental and simple economic truths that have somehow escaped a great many of our people. We would learn that this endless conflict between owner and worker over the division of income is the sheerest, unadulterated folly.

  Of the total sum which the employees and the owners of U. S. Steel divided between them last year, more than 92 per cent went to the employees, while less than 8 per cent went to the owners. Yet that small share which went to the owners was the total “rent” we paid them for all of the billions of dollars worth of plants and furnaces and facilities we used in making steel. And without these facilities, of course, our men could not have made any steel at all.

  A Startling Fact

  Suppose the workers take everything the owners receive for the use of these tools—suppose they wipe out all of the dividends completely and forever—what would each get? Less than a dollar a day! And meanwhile this process would destroy the company, destroy our jobs, work infinite harm upon a vast segment of our national economy, and wipe out the savings which more than 275,000 of our fellow Americans have invested in our business. And for what? For the price of about three cartons of cigarettes a week, apiece!

  American workers will never improve their standard of living by grabbing the meager share which the owners get. They will improve their position only by producing more; for if we produce more goods, we shall have more goods to divide among ourselves. If we produce fewer goods, we shall have less to divide and less to live on.

  And there we have the simple, economic truth of the matter. To live better, we must produce more; but production is the result of teamwork, not of conflict. We cannot produce by fighting each other and hating each other; for by doing that, we destroy ourselves. And we shall only achieve our fullest measure of production when we begin to understand that the interests of worker and owner are not antagonistic, but identical—that under our American system of enterprise, it is impossible over a period of time for one to prosper while the other suffers.

  One of the least appreciated aspects of the private enterprise system is the role of savings in increasing the wealth of all the people. That the savings of some can increase the wealth of all may seem, at first glance, paradoxical, so let us consider for a moment just what happens when an individual—call him Joe—forgoes a little spending to put a sum in the bank.

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