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Protection or Free Trade

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Author Topic: Protection or Free Trade  (Read 4960 times)
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« on: October 26, 2010, 03:03:05 pm »



IF our investigation has as yet let to no satisfactory conclusion it has at least explained why the controversy so long carried on between protectionists and free traders has been so indeterminate. The paradox we have reached is one toward which all the social problems of our day converge, and had our examination been of any similar question it must have come to just such a point.

Take, for instance, the question of the effects of machinery. The opinion that finds most influential expression is that labor-saving invention, although it may sometimes cause temporary inconvenience or even hardship to a few, is ultimately beneficial to all. On the other hand, there is among workingmen a widespread belief that labor-saving machinery is injurious to them, although, since the belief does not enlist those powerful special interests that are concerned in the advocacy of protection, it has not been wrought into an elaborate system and does not get anything like the same representation in the organs of public opinion.

Now, should we subject this question to such an examination as we have given to the tariff question we should reach similar results. We should find the notion that invention ought to be restrained as incongruous as the notion that trade ought to be restrained—as incapable of being carried to its logical conclusions without resulting in absurdity. And while the use of machinery enormously increases the production of wealth, examination would show in it nothing to cause inequality in distribution. On the contrary, we should see that the increased power given by invention inures primarily to labor, and that this gain is so diffused by exchange that the effect of an improvement which increases the power of labor in one branch of industry must be shared by labor in all other branches. Thus the direct tendency of labor-saving improvement is to augment the earnings of labor. Nor is this tendency neutralized by the fact that labor-saving inventions generally require the use of capital, since competition, when free to act, must at length bring the profits of capital used in this way to the common level. Even the monopoly of a labor-saving invention, while it can seldom be maintained for any length of time, cannot prevent a large (and generally much the largest) part of the benefits from being diffused.

From this we might conclude with certainty, that the tendency of labor-saving improvements is to benefit all, and especially to benefit the working-class, and hence might naturally attribute any distrust of their beneficial effects partly to the temporary displacements which, in a highly organized society, any change in the forms of industry must cause, and partly to the increased wants called forth by the increased ability to satisfy want.

Yet, while as a matter of theory it is clear that labor-saving inventions ought to improve the condition of all; as a matter of fact it is equally clear that they do not.

In countries like Great Britain there is still a large class living on the verge of starvation, and constantly slipping over it—a class who have not derived the slightest benefit from the immense increase of productive power, since their condition never could have been any worse than it is—a class whose habitual condition in times of peace and plenty is lower, harder, more precarious and more degraded than that of any savages.

In countries like the United States, where such a class did not previously exist, its development has been contemporaneous with wondrous advances of labor-saving invention. The laws against tramps which have been placed upon the statute books of our states, the restrictions upon child labor which have been found necessary, the walking advertisements of our cities, the growing bitterness of the strife which workingmen are forced to wage, indicate unmistakably that while discovery and invention have been steadily increasing the productive power of labor in every department of industry, the condition of the mere laborer has been growing worse.

It can be proved that labor-saving invention tends to benefit labor, but that this tendency is in some way aborted is even more clearly evident in the facts of today than it was when John Stuart Mill questioned if mechanical invention had lightened the day's toil of any human being. That in some places and in some occupations there has been improvement in the condition of labor is true. But not only is such improvement nowhere commensurate with the increase of productive power; it is clearly not due to it. It exists only where it has been won by combinations of workmen or by legal interference. It is trade unions, not the increased power given by machinery, that have in many occupations in Great Britain reduced hours and increased pay; it is legislation, not any improvement in the general condition of labor, that has stopped the harnessing of women in mines and the working of little children in mills and brick-yards. Where such influences have not been felt, it is not only certain that labor-saving inventions have not improved the condition of labor, but it seems as if they had exerted a depressing effect—operating to make labor a drug instead of to make it more valuable.

Thus, in relation to the effects of machinery, as in relation to the effects of tariffs, there are two sides to the shield. Conclusions to which we are led by a consideration of principles are contradicted by conclusions we are compelled to draw from existing facts. But, while discussion may go on interminably between those who, looking only at one side of the shield, refuse to consider what their opponents see, yet to recognize the contradictory aspects of such a question is to realize the possibility of an explanation that will include both.

The problem we must solve to explain why free trade or labor-saving invention or any similar cause fails to produce the general benefits we naturally expect, is a problem of the distribution of wealth. When increased production of wealth does not proportionately benefit the working-classes, it must be that it is accompanied by increased inequality of distribution.

In themselves free trade and labor-saving inventions do not tend to inequality of distribution. Yet it is possible that they may promote such inequality, not by virtue of anything inherent in their tendencies, but through their effect in increasing production, for, as already pointed out, increase or decrease in the production of wealth may of itself, under certain circumstances, alter the proportions of distribution. Let me illustrate:

Smith, a plumber, and Jones, a gas-fitter, form a partnership in the usual way, and go into the business of plumbing and gas-fitting. In this case whatever increases or decreases the profits of the firm will affect the partners equally, and whether these profits be much or little, the proportion which each takes will be the same.

But let us suppose their agreement to be of a kind occasionally made, that the plumber shall have two-thirds of the profits on all plumbing done by the firm, and the gas-fitter two-thirds of the profits on all gas-fitting. In such case, every job they do will not only increase or decrease the profits of the firm, but, according as it is a job of plumbing or of gas-fitting, will directly affect the distribution of profits between the partners.

Or, again, let us suppose that the partners differ in their ability to take risks. Smith has a family and must have a steady income, while Jones is a bachelor who could get along for some time without drawing from the firm. To better assure Smith of a living, it is agreed that he shall draw a fixed sum before any profits are distributed, and, in return for this guaranty, shall get only a quarter of the profits remaining. In such a case, increase or decrease of profits would of itself alter the proportions of distribution. Increase of profits would affect distribution in favor of Jones, and might go so far as to raise his share to nearly 75 per cent and reduce the share of Smith to little over 25 per cent. Decrease of profits on the other hand would affect distribution in favor of smith, and might go so far as to give him 100 per cent, while reducing Jone's share to nothing. In such a case as this, any circumstance which affected the amount of profits would affect the terms of distribution, but not by virtue of anything peculiar to the circumstance. Its real cause would be something external to, and unconnected with, such circumstance.

The social phenomena we have to explain resemble those presented in this last case. The increased inequality of distribution which accompanies material progress is evidently connected with the increased production of wealth, and does not arise from any direct effect of the causes which increase wealth.

Our illustration, however, yet lacks something. In the case we have supposed, increase of their joint profits would benefit both partners, though in different degrees. Even when Smith's share diminished in proportion, it would increase in amount. But in the social phenomena we are considering, it is not merely that with increasing wealth the share that some classes obtain is not increased proportionately; it is that it is not increased absolutely, and that in some cases it is even absolutely, as well as proportionately, diminished.

To get an illustration that will cover this point as well, let us therefore take another case. Let us go back to Robinson Crusoe's island, which may well serve us as an example of society in its simplest and therefore most intelligible form.

The discovery of the island which we have heretofore supposed, involving calls by other ships, would greatly increase the wealth which the labor of its population of two could obtain. But it would not follow that in the increased wealth both would gain. Friday was Crusoe's slave, and no matter how much the opening of trade with the rest of the world might increase wealth, he could only demand the wages of a slave—enough to maintain him in working ability. So long as Crusoe himself lived he would doubtless take good care of the companion of his solitude, but when in the course of time the island had fully come into the circle of civilized life, and had passed into the possession of some heir of Crusoe's, or of some purchaser, living probably in England, and was cultivated with a view to making it yield the largest income, the gulf between the proprietor who owned it and the slave who worked upon it would not merely have enourmously widened as compared with the time when Crusoe and Friday shared with substantial equality the joint produce of their labor, but the share of the slave might have become absolutely less, and his condition lower and harder.

It is not necessary to suppose positive cruelty or wanton harshness. The slaves who in the new order of things took Friday's place might have all their animal wants supplied—they might have as much to eat as Friday had, might wear better clothes, be lodged in better houses, be exempt from the fear of cannibals, and in illness have the attendance of a skilled physician. And seeing this, island "'statisticians" might collate figures or devise diagrams to show how much better off these toilers were than their predecessor, who wore goatskins, slept in a cave and lived in constant dread of being eaten, and the conclusions of these gentlemen might be paraded in all the island newpapers, with a chorus of: "Behold, in figures that cannot lie and diagrams that can be measured, how industrial progress benefits everybody, even the slave!"

But in things of which the statistician takes no account they would be worse off than Friday. Compelled to a round of dreary toil, unlightened by variety, undignified by responsibility, unstimulated by seeing results and partaking of them, their life, as compared with that of Friday, would be less that of men and more that of machines.

And the effect of such changes would be the same upon laborers such as we call free—free, that is to say, to use their own power to labor, but not free to that which is necessary to its use. If Friday, instead of setting Crusoe's foot upon his head, in token that he was thenceforward his slave, had simply acknowledged Crusoe's ownership of the island, what would have been the difference? As he could only live upon Crusoe's property on Crusoe's terms, his freedom would simply have amounted to the freedom to emigrate, to drown himself in the sea, or to give himself up to the cannibals. Men enjoying only such freedom—that is to say, the freedom to starve or emigrate as the alternative of getting some one else's permission to labor—cannot be enriched by improvements that increase the production of wealth. For they have no more power to claim any share of it than has the slave.
Those who want them to work must give them what the master must give the slave if he wants to him to work—enough to support life and strength; but when they can find no one who wants them to work they must starve, if they cannot beg. Grant to Crusoe ownership of the island, and Friday, the free man, would be as much subject to his will as Friday, the slave; as incapable of claiming any share of an increased production of wealth, no matter how great it might be nor from what cause it might come.

And what would be true in the case of one man would be true of any number. Suppose ten thousand Fridays, all free men, all absolute owners of themselves, and but one Crusoe, the absolute owner of the island. So long as his ownership was acknowledged and could be enforced, would not the one be the master of the ten thousand as fully as though he were the legal owner of their flesh and blood? Since no one could use his island without his consent, it would follow that no one could labor, or even live, without his permission. The order, "Leave my property," would be a sentence of death. This owner of the island would be to the other ten thousand "free men" who lived upon it, their land lord or land god, of whom they would stand in more real awe than of any deity that their religion taught them reigned above. For as a Scottish landlord told his tenants: "God Almighty may have made the land, but I own it. And if you don't do as I say, off you go!"

No increase of wealth could enable such "free" laborers to claim more than a bare living. The opening up of foreign trade, the invention of labor-saving machines, the discovery of mineral deposits, the introduction of more prolific plants, the growth of skill, would simply increase the amount their land lord would charge for the privilege of living on his island, and could in no wise increase what those who had nothing but their labor could demand. If Heaven itself rained down wealth upon the island that wealth would be his. And so, too, any economy that might enable these mere laborers to live more cheaply would simply increase the tribute that they could pay and that he could exact.

Of course, no man could utilize a power like this to its full extent or for himself alone. A single landlord in the midst of ten thousand poor tenants, like a single master amid ten thousand slaves, would be as lonely as was Robinson Crusoe before Friday came. The human being is by nature a social animal, and no matter how selfish such a man might be, he would desire companions nearer his own condition. Natural impulse would prompt him to reward those who pleased him, prudence would urge him to interest the more influential among his ten thousand Fridays in the maintenance of his ownership, while experience would show him if calculation did not, that a larger income could be obtained by leaving to superior energy, skill and thrift some part of what their efforts secured. But while the single owner of such as island would thus be induced to share his privileges by means of grants, leases, exemptions, or stipends, with a class more or less numerous, who would thus partake with him in the advantages of any improvement that increased the power of producing wealth, there would yet remain a class, the mere laborers of only ordinary ability, to whom such improvement could bring no benefit. And it would only be necessary to be a little chary in granting permission to work upon the island, so as to keep a small percentage of the population constantly on the verge of starvation and begging to be permitted to use their power to labor, to create a competition in which, bidding against each other, men would of themselves offer all that their labor could procure save a bare living, for the privilege of getting that.

We can sometimes see principles all the clearer if we imaging them brought out under circumstances to which we are not habituated; but, as a matter of fact, the social adjustment which in modern civilization creates a class who can neither labor nor live save by permission of others, never could have arisen in this way.

The reader of The Further Adventures of Robinson Crusoe, as related by De Foe, will remember that during Crusoe's long absence, the three English rogues, led by Will Atkins, set up a claim to the ownership of the island, declaring that it had been given to them by Robinson Crusoe, and demanding that the rest of the inhabitants should work for them by way of rent. Though used in their own countries to the acknowledgement of just such slaims, set up in the name of men gone, not to other lands, but to another world, the Spaniards, as well as the peaceable Englishmen, laughed at this demand, and, when it was insisted on, laid Will Atkins and his companions by the heels until they had got over the notion that other people should do their work for them. But if the three English rogues had got possession of all the firearms before asserting their claim to own the island, the rest of its population might have been compelled to acknowledge it. Thus a class of landowners and a class of non-landowners would have been established, to which arrangement the whole population might in a few generations have become so habituated as to think it the natural order, and when they had begun, in course of time, to colonize other islands, they would have established the same institution there. Now, what might thus have happened on Crusoe's island, had the three English rogues got possession of all the firearms, is precisely what on a larger scale, did happen in the development of European civilization, and what is happening in its extension to other parts of the world. Thus it is that we find in civilized countries a large class who, while they have power to labor, are denied any right to the use of the elements necessary to make that power available, and who, to obtain the use of those elements, must either give up in rent a part of the produce of their labor, or take in wages less than their labor yields. A class thus helpless can gain nothing from advance in productive power. Where such a class exists, increase in the general wealth can only mean increased inequality in distribution. And though this tendency may be a little checked as to some of them by trades-unions or similar combinations which artificially lessen competition, it will operate to the full upon those outside of such combinations.

And, let me repeat it, this increased inequality in distribution does not mean merely that the mass of those who have nothing but the power to labor do not propertionately share in the increase of wealth. It means that their condition much become absolutely, as well as relatively, worse. It is in the nature of industrial advance—it is of the very essence of those prodigious forces which modern invention and discovery are unloosing, that they must injure where they do not benefit. These forces are not in themselves either good or evil. They bring good or evil according to the condtions under which they are exerted. In a state of society in which all men stood upon an equality with relation to the use of the material universe their effects could be only beneficent. But in a state of society in which some men are held to be the absolute owners of the material universe, while other men cannot use it without paying tribute, the blessing these forces might bring is changed into a curse—their tendence is to destroy independence, to dispense with skill and convert the artisan into a "hand," to concentrate all business and make it harder for an emplyee to become his own employer, and to compel women and children to injurious and stunting toil. The change industrial progress is now working in the conditions of the mere laborer, and which is only somewhat held in check by the operations of trades-unions, is that change which would convert a slave who shared the varied occupations and rude comforts of his goatskin-cloathed master into a slave held as a mere instrument of factory production. Compare the skilled craftsman of the old order with the operative of the new order, the mere feeder of a machine. Compare the American farm “help" of an earlier state, the social equal of his employer, with the cow-boy, whose dreary life is enlivened only by a "round up" or "drunk,” or with the harvest hand of the "wheat factory," who sleeps in barracks or barns, and after a few months of employment goes on a tramp. Or compare the poverty of Connemara or Skye with the infinetely more degraded poverty of Belfast or Glasgow. Do this, and then say if to those who can only hope to sell their labor for a subsistence, our very industrial progress has not a dark side.

And that this must be the tendency of labor-saving invention or reform in a society where the planet is held to be private property, and the children that come into life upon it are denied all the right to its use except as they buy or inherit the title of some dead man, we may see plainly if we imagine labor-saving invention carried to its furthest imaginable extent. When we consider that the object of work is to satisfy want, the idea that labor-saving invention can ever cause want by making work more productive seems preposterous. Yet, could invention go so far as to make it possible to produce wealth without labor, what would be the effect upon a class who can call nothing their own, save the power to labor, and who, let wealth be never so abudant, can get no share of its except by selling this power? Would it not be to reduce to naught the value of what this class have to sell; to make them paupers in the midst of all possible wealth—to deprive them of the means of earning even a poor livelihood, and to compel them to beg or starve, if they could not steal? Such a point it may be impossible for invention ever to reach, but it is a point toward which modern invention drives. And is there not in this some explanation of the vast army of tramps and paupers, and of deaths by want and starvation in the very midst of plenty?

The abolition of protection would tend to increase the production of wealth—that is sure. But under condtions that exist, increase in the production of wealth may itself become a curse—first to the laboring-class, and ultimately to society at large.

Is it not true, then, it may be asked, that protection, for the reason at least that it does check that freedom and extension of trade which are essential to the full play of modern industrial tendencies, is favorable to the working-classes? Much of the strength of protection among working-men comes, I think, from vague feelings of this kind.

My reply would be negative. Not only has protection—which is merely the protection of producing capitalists against foreign competition in the home market—tendencies in itself toward monopoly and inequality, but it is impotent to check the concentrating tendencies of modern inventions and processes. To do this by "protection" we must not only forbid foreign commerce, but restrain internal commerce. We must not only prohibit any new applications of labor-saving invention, but must prevent the use of the most important of those already adopted. We must tear up the railway and go back to the canal-boat and freight wagon; cut down the telegraph wire and rely upon the post-horse; substitute the scythe for the reaper, the needle for the sewing-machine, the hand loom for the factory; in short, discard all that a century of invention has given us, and return to the industrial processes of a hundred years ago. This is an impossible as for the chicken to go back to the egg. A man may become decrepit and childish, but once manhood is reached he cannot again become a child.

No; it is not in goind backward, it is in going forward, that the hope of social improvement lies.
« Last Edit: November 08, 2010, 11:16:40 am by Geolibertarian » Report Spam   Logged

"For the first years of [Ludwig von] Mises’s life in the United States...he was almost totally dependent on annual research grants from the Rockefeller Foundation.” -- Richard M. Ebeling
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