A DEMOCRACY OF CAPITAL

Evening Star, Issue 17536, 16 December 1920, Page 8

A DEMOCRACY OF CAPITAL

WORKERS’ INVESTMENT OP WAGE SURPLUS. AMERICAN VIEW OP PROBLEM. - In a recent book, ‘ Why Men Strike,’ Samuel Crowther (an American) analyses that public ignorance of basis facts which is at the bottom of the epidemic of strikes, with the progressive forcing up of wages without increase of production. His book is an attempt to lead persuasively up to _ this question i Instead of destroying capital, why not destroy poverty? BEDROCK PACTS. “Tire net worth of the world is very much less now than it was in 1914 (he writes), but to facilitate the dissipation of wealth we have put many times the.normal amount of money into circulation, and have created • perfectly stupendous bank deposits. Every nation has not only spent far in excess of its income for non-produc-tive purposes, hut also has mortgaged a largo proportion of its assets and future

income. • “It seems almost unnecessary to note that if you borrow 5,000d0l from a bank, and it is credited to your account, the deposits will be swollen by 5,000dol; and that, as you distribute this new buying power, the deposits of other banks will rise, and that the 5,000d0l will stay in circulation as purchasing power until somebody pays it off. It can be paid off only out of savings; it is not paid off by shifting loans, and while it remains in circulation it is not wealth, but merely purchasing power. Wealth is haled only on production—on things. Bank deposits have increased anywhere from 50 per cent, to 100 per cent.; the wealth of the country has not increased—if it has increased at all—in anything like that amount. So, therefore, a considerable proportion of our bank deposits—what proportion we do not know—is nothing more than inflation. “The backward employer and the average Labor leader are curiously in agreement on one economio fallacy. This sort of employer, failing to 'improve the possibilities of his business, works for high production, not necessarily with low labor costs, but with low wages. Labor costs and wages are very different. The Labor leader works for high wages and a strictly limited production. Both are chasing the same kind of rainbow. If this sort of employer had his way he would speedily have a great lot of goods on hand and no one to buy them. If the Labor leader had his way—and lately he seems to be getting it—his people would have large amounts of money and nothing to buy with it,” SOME SANE ADVICE. “No matter from what angle you approach our situation, you run up'against the need for greater production. “If you would deflate the currency and credit—it must be by production. Then you can relate wages and costs again. “If you would lower prices—it must be by production. “If you would better tho actual position of working people, making wages really buy—it must be by production. “To attain this larger production we need more and more capital. Those who provided that capital in the past are going to have steadily less of it in the future. “ The old idea was that capital accumulations should come more largely from the employing than from tho employed. “ But now, with heavy taxation, the people of largo incomes will have very much less money for investment that previously they hid. The Government are taking a considerable share of every income that was once thought to bo of a size capable of making its owner an investor. They are taking the bulk of very large Incomes. In proportion the Email income will give a greater surplus than the largo. “But it is not only the taxation that will make the difference. The workers will inevitably have more and more, not because they are asking for it through strikes, since strikes rarely raise wages, except in dollars. Tho unions claim that’ they have raised wages, but, as a matter of fact, they have duly registered the competition of capital for men. “Wages have been increasing faster than the Cost of Living, and the surplusof the wage-earners over Cost of Living is the greatest potential fund for investment in the country. It is not merely a potential fund; it is the fund from which must he drawn the future capital to improve industry. The savings of the workers are greater than the savings of the 1 capitalists.’ The true democratic control of industry is for the workers to use this fund for investment. They can buy their way into industry, but" they cannot break their way in, for when they have broken, in they will find nothing there. “We know that: “ (1) The more quickly capital accumulates, the more quickly wages rise in actual buying power. “ (2) On the other hand, if capital is not accumulated, wages must fall, because the country will not he producing enough wealth to declare a dividend. “ (3) That the toad to freedom is through more wealth and not less, “Then why does not somebody get up and say sot “The man who works for wages is today the man with the money of the coun-try—-he is tho man with a surplus.”