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Sunday, June 10, 2012


Foundation of Economic Education


  Samuel B. Pettengill

  In 1848, Karl Marx and Friedrich Engels wrote The Communist Manifesto, which begins with these words: “A specter is haunting Europe—the specter of Communism.” This reads like today’s newspaper. Yet the words were written one year before gold was discovered in California, before the covered wagons began to roll across the plains. Please keep this date in mind. It is significant to what I shall say.

  In London a few years later, Marx wrote Das Kapital—the “bible” of the Communists and Socialists. As a reporter, Marx was accurate. The conditions of the workers in England a century ago, as he pointed out, were very grim. Women with ropes over their shoulders pulled canal boats along the towpaths. Women were harnessed like beasts of burden to cars pulling coal out of British mines. Children went to work in the textile mills when they were nine or ten years old, and they worked 12 to 15 hours a day. It was said that the beds in which they slept never got cold as one shift took the place of the other. It was said that they were “machines by day and beasts by night.” Tuberculosis and other diseases killed them off like flies.

  Yes, conditions were terrible. Not only Marx, but other warm-hearted men—Charles Dickens, John Ruskin, Thomas Carlyle—poured out a literature of protest, which was read around the world.

  On his facts, Marx can scarcely be challenged. But his diagnosis was wrong; and, therefore, the remedy he prescribed was wrong also.

  Marx said that these terrible conditions were due to greed, exploitation, and the theft by the owners of the mines and mills of the “surplus value” produced by the workers. That was his diagnosis. And to some extent, it was partly correct. Man’s inhumanity to man has always been a factor in human affairs. Greed can never be defended—whether in business or in government. Sympathy for the underdog will always have its work to do—always, certainly, in the communist nations with their forced labor camps and human slavery.

  The remedy advanced by Marx was to preach the gospel of hate, of the class struggle, of the redistribution of wealth, of the confiscation of property and its ownership and management by the state—which always means the politicians. But greed and exploitation are not cured by socialism. Stalin and Molotov live like oriental potentates, giving state dinners that would make Nero and Caligula green with envy—all this in the name of the down-trodden proletariat!

  Greed, however, was not the main reason for the conditions which Marx described. If all the wealth of the owners of the mines and mills had been redistributed to the workers, it would have relieved their condition but slightly, and for but a short time.

  So, the class struggle, as the remedy for these conditions, was wrong. What then was the real trouble, and what is the true remedy?

  Low Productivity at Fault

  The real trouble was the low productivity of the workers. And, as workers can be paid only out of production—whether in England a century ago or in Russia today—wages must be low and hours of work long when production is low.

  Production was low because tools and equipment were poor; because human backs had to do what slaves of iron and steel do today here in America; because capital had not been accumulated to buy better tools; because freedom had so recently emerged from centuries of feudalism that the inventors and scientists and businessmen had not had a chance to dream and to plan. They have had that chance today here in America.

  Listen. In 1940, before war increased our production, it was estimated that electric power alone in this country was performing work equal to the labor of 500,000,000 men, each working eight hours a day. This is equal to nearly ten times the total human labor force employed in America and 50 times the number employed in manufacturing— and that leaves out steam power and gasoline power and windmill power, with their tremendous contributions for increasing the productivity of workers and thereby lifting burdens from human backs.

  No wonder America outproduced the world in this last war! No wonder wages are higher here than anywhere in the world! While Marx preached the gospel of hate and the class struggle, America gave the green light to the Edisons, the Whitneys, the Burbanks, and the Fords.

  James Watt, the inventor of the steam engine which revolutionized the modem world, and those who followed him in the competitive struggle to make a better engine and sell it for less, did more to take women out of the coal mines and off the towpaths of the canal boats, more to take children out of the factories, than did all the Socialists and Communists and politicians of the world combined.

  Yet Watt’s name would be unknown today if one of these despised capitalists, a man named Matthew Boulton, had not risked $150,000 on Watt’s invention. Would he, by the way, dare take that risk under today’s taxation?

  A Measure of Progress

  One measure of the progress of civilization is the extent to which mechanical horsepower and tools supplement human labor. The steam engine did more to outlaw slavery, both in England and America, than did all the political humanitarians put together.

  The laboratories do far more for mankind than do the legislatures. If modem Americans were to go back to the same tools and horsepower that were available when Benjamin Franklin was trying to capture lightning from the sky, our production of wealth would at once go down 90 per cent; wages would go down in proportion; hours of labor would increase to the limit of human endurance; the population would necessarily decrease drastically; and nothing that governments or humanitarians or labor unions or Communists could do would prevent it.

  I mentioned the discovery of gold in California in connection with The Communist Manifesto of 1848. With pick and shovel and a pan in which to wash gravel from gold, didn’t men work long hours for a meager return, or for none? Didn’t they sleep in filthy cabins and live on jerked meat, and weren’t they often covered with lice?

  If you saw that great motion picture, The Covered Wagon, you will recall the scenes of terrible toil—of men and women and children pulling the wagons across rivers and the trackless desert and over the Continental Divide; of families, on foot, pushing handcarts from the Mississippi to Salt Lake.

  Yet, were those conditions due to greed and exploitation? No, the people were working for themselves. What was wrong? The answer is poor tools. The plow of the pioneer was a wooden plow, constantly breaking, constantly needing repairs.

  Poor Transportation

  In Vermont where I was raised, a man back in my great-grandfather’s time dug some iron ore out of a hill. He put 100 pounds in a bag on his back and walked 80 miles through the wilderness to sell it to an iron foundry in Troy, New York; and then he walked home—an infinite expenditure of human energy for an insignificant return.

  What was wrong? Greed? Exploitation? The class struggle? No—he was working for himself. There was no relationship of employer and employee; no one was stealing the “surplus product” of his labor. He kept all of it—and it was little indeed.

  What was wrong? Why did he have to work so hard for so little? The answer is poor tools. Today the steam engine, in the form of the modern locomotive, could move his 100 pounds of iron ore 80 miles for four cents—or a ton, one mile for one cent! Railroads, paved highways, motor trucks, and automobiles have solved his problem and will do it even better in the days to come, if we stay American.

  Let us say that James Watt and the man who financed his project were not humanitarians. Let us say that they put their brains and money together in a common enterprise for the profit motive. What of it? Was the result good or bad? Did they take the women out of the coal mines or did

  Karl Marx, with his gospel of hate and the class struggle?

  What did the profit motive do? It made Watt and his partner, and all who followed them, work to make better engines and to offer them at a lower price to get the market from their competitors.

  Was the result good or bad? The profit motive is just as honorable and useful to mankind as is the wage motive. Both do infinite good.

  The wage motive prompts men to become skilled and efficient so they can produce more and earn higher wages; and because they do, all mankind benefits.

  The profit motive prompts men to make better tools and to cut costs in order to sell cheaper; and again, all mankind benefits.

  The radio which only 25 years ago sold for $300 now sells for $30 or less, and it is a better radio.

  Has the result of the competitive struggle in the field of radio been good or bad? The result has been good—humanitarian, if you please. It brings the news of the world, good music, and discussions of public affairs to the remotest farmhouses and to people on their sickbeds.

  Not many centuries ago, starvation was a common occurrence—even in England, where 90 per cent of the people lived on the land. Was the conquest of starvation a humanitarian thing? What conquered it? Who conquered it? Karl Marx? No!

  In America, the time in the field required to raise an acre of wheat has gone down from 60 hours of human labor in 1830 to two hours or less in 1930.

  What caused this decrease? The steel plow, the tractor, the harvester, better seed, the conquest of insects and plant diseases, and cheap transportation were responsible. Today, American wheat feeds millions in a Europe that is adopting the philosophy of Karl Marx!

  Aluminum was so expensive in 1870 that Napoleon III of France had an aluminum table set— more valuable than gold—for state dinners. Today, aluminum is commonplace in the American kitchen.

  The Answer

  No, my friends, Karl Marx did not have the answer—he lifted no burdens from human backs. The answer is not in the class struggle. The answer is in competitive free enterprise. The answer is in the cooperation of inventor and investor; in the cooperation of the manager and the worker with his know-how. The answer is to substitute slaves of iron and steel for the strength of human backs. The answer is constitutional liberty, which sets men free and says that what any man honestly makes is his “to have and to hold.”

  Wages can be paid only out of the product; and the larger the production, the higher the wage. The more money that is invested in horsepower and equipment—the more capital that is put to work— the less will children and women and men have to work at killing toil. The true remedy for our troubles is more capitalism, not less

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