The truth of this principle is strikingly ill.u.s.trated in Canada, Australia, Argentina, and other relatively new societies where resources are abundant and surplus is large. The same men and women who, under European conditions of narrow marginal living, were satisfied to survive with the least possible expenditure of effort, are transformed into creatures operating on another economic plane. In these new and fertile countries, where the individual, and indeed, the entire group is able to live above the line of bare subsistence, and where surplus is so easily acc.u.mulated, the individual devotes himself untiringly to the economic struggle. It is not because they are poor, but because they have a chance to get rich that these people are willing to expend unusual effort.

Just as the individual, working on a basis of economic surplus, directs his energies to the task of insuring and of increasing the surplus, so the group, which has a similar economic advantage, devotes itself to the task of building up a surplus as soon as it realizes the possibility of increasing its returns through an increase in the energy and intelligence devoted to group purposes.

The personal comfort and the industrial prosperity of temperate zone civilizations depend, at the present moment, in great measure upon the supply of coal which is available. Certain parts of the earth, such as Wales, the Saar Basin and Newfoundland contain coal deposits upon which the entire industrial society is dependent for its survival. It is, then, a matter of the gravest importance to secure a maximum coal output, at least to the point of satisfying the minimum demands of the community. Whatever men and machinery are required to produce the ration of coal upon which industrial efficiency depends must be directed toward that goal. At the same time, waste, inefficiency and dis-employment, whether of men or of machines must be reduced to a minimum.

What volume of production const.i.tutes a maximum of return under a given set of circ.u.mstances, experiment alone will decide, but the individual and the social effort to secure this return must be unremitting.

Such maximum returns will be obtained by society when each productive unit is operating at maximum efficiency. The efficiency of the human body depends upon the efficient operation of the digestive system, the respiratory system, the circulatory system, and so on. The stomach, the lungs, the heart must all function smoothly to maintain bodily health.

The body cannot function as a body. It functions through the aggregate activities of its various organs. The same thing is true of a society.

It is impossible for the economic system to secure its maximum returns as a system. It will work only through the co-operative functioning of its various const.i.tuent elements. If the efficiency (health) of the economic system is to be preserved, it will be accomplished through the effective working of the mines and other extractive units; the mills, and the other fabricating units; the railroads and other transport units. Each one of these const.i.tuent elements of the whole economic society must be self-efficient, in order that there may be a high standard of efficiency in the entire economic system.

The units of which the economic system is composed must therefore be self-motivating and self-acting. They must be "alive." If one part of the economic body is dead, the whole will eventually disintegrate and decay.

2. _The Essentials for Maximum Returns_

The efficiency of the economic unit--the mine, the factory, the railroad division--depends upon the att.i.tude of the individual human beings of which the unit is composed. Just as the entire economic system is made up of an aggregate of functioning units, so each unit is made up of functioning individuals. What would a coal mine be without its pick miners, road men, drivers, door-men, dumpers? The efficiency of the economic unit cannot be maintained unless the individuals who compose it are self-acting, intelligent beings, who know what they want and why they want it; who know the ends they desire to attain and how to reach them. Without this beginning there can be no lasting efficiency in a society that is dependent for its success upon the self-generated activity of autonomous groups.

In order that society may enjoy a maximum of return for its outlay of labor and machinery, therefore:

1. _The human values present in each economic unit must be maintained at a high level through an appeal to the finest qualities of the individual human being._

That appeal must be strong enough and constant enough, when coupled with the economic appeal, to provide a reason or incentive for continued activity.

2. _The integrity and permanence of the unit must be preserved._

The economic unit is one of the tools with which society does its work, and is the means relied upon for the production of livelihood. Like the axe of the woodsman or the lathe of the mechanic, the social tools and machinery must be kept in effective working order if society is to receive a return for its outlay of labor and materials. Three items enter into the maintenance of this efficiency: (a) current repairs, (b) periodic rebuilding, and (c) ultimate replacement. This is as true of any part of the social structure as it is of mechanical devices. The more complicated the structure the more necessary are rebuilding and replacement.

3. _The productivity of the unit must be kept up to a high level of efficiency._

This is the purpose for which the unit exists. Efficiency is the product of the individual activity of the group members, and of the working effectiveness of the mechanism with which they accomplish their tasks.

Thus both are essential to efficiency in production.

4. _Self-motivation and co-operation are the two fundamentally important requirements in the working of all economic units._

The former is the best guarantee of the continuous functioning of the unit. The latter links together the different units, making them working parts of the whole economic system.

Here are four indispensable requirements--the maintenance of human values, the preservation of group integrity and permanence, productive efficiency and self-generated activity--for the building and successful continuance of economically sound unit groups. If society is to secure maximum returns, if the economic mechanism is to yield its largest quota of goods and services to mankind, the units out of which society is built must meet these requirements which const.i.tute four of the essential pre-requisites to the success of any economic experiment.

3. _Centralized Authority_

Granted the desirability of efficiency in economic organization, the question at once arises as to how this efficiency is to be guaranteed.

Up to this point the means adopted to secure such an end have consisted in concentrating economic authority in the hands of a small owning and managing cla.s.s, and in leaving with the members of this cla.s.s the determination of policy and of methods of procedure.

The concentration of administrative authority at one point has proved impracticable, first because of the great amount of red tape involved in the handling of the endless detail, and second because of the resulting destruction of initiative and enterprise. Such a centralization of social function would be just as c.u.mbersome as a like centralization of all bodily functions in the higher brain centres. If men were compelled to reason about and to direct each step, each movement of eyes or hands, each breath, each heart-beat, the attention would never pa.s.s beyond the boundaries of such pressing and never-ending routine. Many bodily organs, like the stomach, function involuntarily. Walking becomes habitual. It is only when the stomach and the legs fail to work properly that they become the objects of attention. The same thing should be true of a well-directed economic system. Each local unit should function locally and autonomously, and the problems of local function should never come to the attention of a more central authority until there is some failure to work on the part of the local unit.

Those who despair of the future of society, and who feel that effective co-operation between social groups is impossible, should remember that the organs of the human body have been gaming experience in co-operative and harmonious function for hundreds of thousands or for millions of years, while the organization of society is an art that is still in its extreme infancy. The astonishing thing about the various social groups is not that they work so badly together, but that they work so well.

As the centralization of authority increases, the amount of red-tape piles up until more social energy is consumed in overcoming social inertia and the friction that is the result of social function, than is produced by the function in question. When this point is reached, the social machinery operates at a constant loss, and it is only a question of time when it will cease to operate altogether, and the social machinery will begin to disintegrate into its const.i.tuent elements. The greater the degree, therefore, of localization, provided the mechanism can be held together and kept in working order, the less the loss in social energy.

4. _An Ideal Economic Unit_

The social group thus faces two problems: One is the development of sufficient energy to keep the social machinery going. This problem is tied up with the stimulation of human wants, as it is only from the aroused energies of men and women that the social energy is derived. The other is the reduction of social friction and other forms of social waste to a minimum, in order that the largest possible amount of social energy may be devoted to the work of driving society.

The present social order relies, in part, for its driving power on man's desire for personal economic advantage. Where the rewards have been considerable, large amounts of energy and ingenuity have been developed as the result of this stimulus. The worker, the manager, the whole producing unit strove to excel, both because failure carried with it the penalty of destruction (bankruptcy or unemployment) and because success carried with it the probability of large economic rewards (profits). The result was an outpouring of social energy in the various independent local groups.

The real difficulty inherent in the earlier stages of the present order was not its failure to secure abundant human exertion, but its failure to provide any means of co-operation between individuals and between groups. The same set of social principles which decreed local rewards and local punishments for initiative and enterprise, or for the lack of them, was built upon the theory that "compet.i.tion is the life of trade."

Thus, while the present economic system, in its earlier stages tended to stimulate initiative, its form made co-operation difficult or impossible.

The ideal economic unit would be one capable of generating its own driving power, and given a legitimate exchange of commodities and services with other units, one that could maintain its own energy and efficiency. A society composed of such units would have great vitality because its energy would be generated in a large number of more or less independent localities. A study of the agricultural village of Central Europe or of the Mexican Indians shows how workable and how stable such a form of society really is.

The only practicable method of maintaining efficiency and of reducing the friction incident to social function is to erect a form of local self-government that will make possible both the stimulation of initiative and effective co-operation between groups.

5. _Rewarding Energy_

The issue of economic self-government resolves itself into two questions, which the average human being will sooner or later ask:

1. What do I get out of it?

2. Who is to be the boss?

The intelligent man or woman cannot be expected to exert himself freely for the building of a palace at Versailles, on whose grounds he can never set foot, or for the maintenance of a Palm Beach that he sees only on the screen. The economic necessities are too immediate and the economic urge is too strong.

Before the individual will expend his maximum energy upon the economic process, he must see tangible results such as bread, shoes, schools, and holidays. One of the strongest arguments that the present economic system advances in favor of its continuance is the showing of large tangible returns in the form of economic goods. To be sure these results have not been secured by everyone, but there is neighbor Pitt who started as a stable boy, and who now owns the largest garage in the city; there is neighbor Wallace who began life as a grocery clerk and to-day is master of many acres of coal and timber. Besides, yonder store is filled with the good things of life, ready for anyone who has the money to buy them. Many persons, under the present system, make enough to buy all of them and others beside. So the argument runs, and those who advance it can give a wealth of instances to prove the point.

The huge rewards of the present system even though they have gone to the very few, have been turned over to those who could survive in the struggle. Everyone knows that the winners in a lottery are few and the losers many, yet each buys a ticket because he hopes and expects to be one of the winners.

Society, as reconstructed, must be less of a gambling venture and more of an established certainty, with the material rewards going to those who are responsible for producing them. And each person who thus shares in the economic rewards of society must see the connection between the energy expended and the share received. Only while such a connection apparently exists will economic effort be expended by the normal individual.

6. _The Ownership of the Economic Machinery_

The individual cannot be expected to exert himself where there is no apparent connection between the effort expended and the return for his effort. Neither can he be expected to exert himself in the interest of economic machinery that belongs to someone else. His interest can be maintained only by the hope of a return for the effort that he expends, and by a sense of control over the job on which he works. Among the various experiments that society has tried, in an effort to attain these ends, none has been more successful than self-government.

The application of the principle of self-government to the economic world involves the control of economic machinery and economic policy in each unit by those who compose the unit. The members of each economic group must be supreme in their own field, except in so far as their decisions affect the welfare of other units. In such cases the decision must rest with that larger economic group to which the involved economic units belong. Thus the aim of economic self-government is to keep the responsibility centered upon those who would normally be the most concerned in getting results.

All matters of policy will therefore be decided by those individuals or groups that are directly involved. Where possible such decisions should be reached in open meetings corresponding to the tribal council or the town meeting. Such meetings may always be held in local economic units, such as collieries, departments of factories and the like. Where it proves impossible to get the members of an economic group all into one meeting place, their affairs must necessarily be transacted by representatives, chosen as directly as possible.

7. _Economic Leadership_

The decisions having been made with regard to matters of policy, the next and equally important question arises: "Who shall be entrusted with the duty of seeing that policies once decided upon are carried out? Who shall be entrusted with leadership in economic affairs?"

Those who are entrusted with the carrying out of economic policy in a producers' society may be divided, roughly, into two cla.s.ses: the executive and the expert. The executive is the director of general policy. The expert is the specialist, selected to do a particular piece of work. For example, the representatives of District 2, United Mine Workers of America decide that, as a matter of general policy, they will advocate the nationalization of the coal mines, and they instruct their president and their executive board accordingly. The executives of District 2 are therefore charged with the duty of organizing a propaganda, which, to be effective, must consist of a well-ordered summary of facts about the coal mining industry, put in a form that can be easily understood by the average man, and distributed in such a manner that it will reach the people responsible for coal mine nationalization. Here, then, are three distinct tasks: (1) an investigation of the facts; (2) a plan for nationalization; and (3) an advertising campaign. The first two of these tasks, to be well done, must be placed in the hands of engineers, statisticians and mine experts. The third will fall to the lot of an advertising or publicity man. The president of District 2 is an executive, charged with the duty of seeing that a program of mine nationalization is carried forward. The engineers, statisticians and advertising men that he secures to do the work in their respective fields are experts. These distinctions have been well established in the world of government and of business, and they are rapidly finding their way into the world of labor.

There can be no great difference of opinion about the expert. He is a technically trained man, and as a chemist, an electrician, or as an auditor of accounts he has a special field in which he is supposed to be a master craftsman. The selection of such an expert, therefore, is a question of finding men with the knowledge and experience necessary for the doing of a certain piece of work.