In Defense of Capitalism (Communism, part 5)

 

( Part 1: The Communist Manifesto | Part 2: Capital, volume 1 | Part 3: Capital in the Twenty-First Century | Part 4: The Conquest of Bread | Part 5: In Defense of Capitalism )

 

Andrew Carnegie is often portrayed as the nice robber baron. The reluctant superrich businessman conflicted about the morality of what he was doing.

 

 

Well, that’s how he is shown in the Men Who Built America. Remember that docu - series? It was produced in the wake of the Occupy Wall Street protests and is clearly aimed at them, informing the public about all the wonderful things the rich do for us, how they create jobs for everyone and they make all the things we enjoy, such as iphones and cheap clothing, and if not for them we would all live in squalor.

In the essay The Gospel of Wealth, first published in 1889, steel magnate Andrew Carnegie puts forth the following chain of logic:

1) In the beforedays, the economy was in the hands of individual craftsmen, and the result was a small quantity of poorly-made articles nobody could afford except the rich.

Formerly articles were manufactured at the domestic hearth or in small shops which formed part of the household. The master and his apprentices worked side by side, the latter living with the master, and there- fore subject to the same conditions. When these apprentices rose to be masters, there was little or no change in their mode of life, and they, in turn, educated in the same routine succeeding apprentices. There was, substantially, social equality, and even political equality, for those engaged in industrial pursuits had then little or no political voice in the State.

But the inevitable result of such a mode of manufacture was crude articles at high prices. To-day the world obtains commodities of excellent quality at prices which even the generation preceding this would have deemed incredible. In the commercial world similar causes have produced similar results, and the race is benefited thereby. The poor enjoy what the rich could not before afford. What were the luxuries have become the necessaries of life. The laborer has now more comforts than the farmer had a few generations ago. The farmer has more luxuries than the landlord had, and is more richly clad and better housed. The landlord has books and pictures rarer, and appointments more artistic, than the King could then obtain.

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2) Some people are naturally talented in administration of things and people, and they cannot help but found businesses and get rich, and in so doing they organize the people to make luxury goods that all enjoy, even if the lowest classes must be sacrificed in the factories so the species itself can rise.

The price we pay for this salutary change is, no doubt, great. We assemble thousands of operatives in the factory, in the mine, and in the counting-house, of whom the employer can know little or nothing, and to whom the employer is little better than a myth. All intercourse between them is at an end. Rigid Castes are formed, and, as usual, mutual ignorance breeds mutual distrust. Each Caste is without sympathy for the other, and ready to credit anything disparaging in regard to it. Under the law of competition, the employer of thousands is forced into the strictest economies, among which the rates paid to labor figure prominently, and often there is friction between the employer and the employed, between capital and labor, between rich and poor. Human society loses homogeneity.

The price which society pays for the law of competition, like the price it pays for cheap comforts and luxuries, is also great; but the advantages of this law are also greater still, for it is to this law that we owe our wonderful material development, which brings improved conditions in its train. But, whether the law be benign or not, we must say of it, as we say of the change in the conditions of men to which we have referred: It is here; we cannot evade it; no substitutes for it have been found; and while the law may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department. We accept and welcome, therefore, as conditions to which we must accommodate ourselves, great inequality of environment, the concentration of business, industrial and commercial, in the hands of a few, and the law of competition between these, as being not only beneficial, but essential for the future progress of the race. Having accepted these, it follows that there must be great scope for the exercise of special ability in the merchant and in the manufacturer who has to conduct affairs upon a great scale. That this talent for organization and management is rare among men is proved by the fact that it invariably secures for its possessor enormous rewards, no matter where or under what laws or conditions. The experienced in affairs always rate the man whose services can be obtained as a partner as not only the first consideration, but such as to render the question of his capital scarcely worth considering, for such men soon create capital; while, without the special talent required, capital soon takes wings. Such men become interested in firms or corporations using millions; and estimating only simple interest to be made upon the capital invested, it is inevitable that their income must exceed their expenditures, and that they must accumulate wealth. Nor is there any middle ground which such men can occupy, because the great manufacturing or commercial concern which does not earn at least interest upon its capital soon becomes bankrupt. It must either go forward or fall behind: to stand still is impossible. It is a condition essential for its successful operation that it should be thus far profitable, and even that, in addition to interest on capital, it should make profit. It is a law, as certain as any of the others named, that men possessed of this peculiar talent for affairs, under the free play of economic forces, must, of necessity, soon be in receipt of more revenue than can be judiciously expended upon themselves; and this law is as beneficial for the race as the others.

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3) It is pointless to give to the common person a fair wage, or even a surplus, because the average person will not know what to do with it. He will waste it on vices and subsistence living and won’t create anything for the good of mankind. The great wealth generated by industry flows into the hands of the great administrators and founders of businesses and should be managed by them because those men and women will know what to do with such wealth. They will put it to uses that benefit the species.

There remains, then, only one mode of using great fortunes; but in this we have the true antidote for the temporary unequal distribution of wealth, the reconciliation of the rich and the poor—a reign of harmony—another ideal, differing, indeed, from that of the Communist in requiring only the further evolution of existing conditions, not the total overthrow of our civilization. It is founded upon the present most intense individualism, and the race is prepared to put it in practice by degrees whenever it pleases. Under its sway we shall have an ideal state, in which the surplus wealth of the few will become, in the best sense, the property of the many, because administered for the common good, and this wealth, passing through the hands of the few, can be made a much more potent force for the elevation of our race than if it had been distributed in small sums to the people themselves. Even the poorest can be made to see this, and to agree that great sums gathered by some of their fellow-citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among them through the course of many years in trifling amounts.

If we consider what results flow from the Cooper Institute, for instance, to the best portion of the race in New York not possessed of means, and compare these with those which would have arisen for the good of the masses from an equal sum distributed by Mr. Cooper in his lifetime in the form of wages, which is the highest form of distribution, being for work done and not for charity, we can form some estimate of the possibilities for the improvement of the race which lie embedded in the present law of the accumulation of wealth. Much of this sum, if distributed in small quantities among the people, been wasted in the indulgence of appetite, some of it in excess, and it may be doubted whether even the part put to the best use, that of adding to the comforts of the home, would have yielded results for the race, as a race, at all comparable to those which are flowing and are to flow from the Cooper Institute from generation to generation. Let the advocate of violent or radical change ponder well this thought.

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This, then, is held to be the duty of the man of Wealth: First, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere agent and trustee for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.

You really should read it for yourself. It’s not that long, and it’s not hard to understand.

This is what the rich think of us. We are incapable of doing anything ourselves. We need a rich businessman to give us things.

So what does Carnegie recommend the wealthy spend their money on within their lifetimes? Not building new roads or funding public education, but building libraries. Music halls. Private universities which only the richest of the rich can afford to attend. Public parks so the poor can sniff flowers within city limits. Certainly nothing that actually benefits the people who work for him, but places that enrich the mind and encourage the people to help themselves.

You know what would help the people help themselves? A livable wage! A 5-hour workday, three days a week, so they have time to enrich their minds! Such a thing is possible! It is only pressure from investors that pushes wages down and increases the length of the working day!

I like how Upton Sinclair mocked Carnegie’s views directly in The Jungle:

You would begin talking to some poor devil who had worked in one shop for the last thirty years, and had never been able to save a penny; who left home every morning at six o’clock, to go and tend a machine, and come back at night too tired to take his clothes off; who had never had a week’s vacation in his life, had never travelled, never had an adventure, never learned anything, never hoped anything—and when you stated to tell him about Socialism he would sniff and say, ‘I’m not interested in that—I’m an ‘Individualist.’ [...] And then he would go on to tell you that Socialism was ‘Paternalism,’ and that if it ever had its way the world would stop progressing. [...] For how many millions of such poor deluded wretches there were, whose lives had been so stunted by Capitalism that they no longer knew what freedom was! And they really thought that it was ‘Individualism’ for thousands of them to herd together and obey the orders of a steel magnate, and produce hundreds of millions of dollars of wealth for him, and then let him give them libraries; while for them to take the industry and run it to suit themselves, and build their own libraries—that would have been ‘Paternalism’!

Why should we trust these rich people with the value of our labor if all they will give us in return is a public park and a library? If people must be sickened by pollution and have their land strip-mined and ruined and their lives shortened in factories so the rest of us can enjoy the benefits of iphones and cheap clothing, maybe those businesses should not exist and we would be better off going back to true individualism, when the individual really was the economy, and individuals were masters of their own professions and didn’t have to rely on an employer for their very survival.

Craftsmen produced works of quality and beauty. They did not need the factoryowner to come along and design a machine to make those same goods in larger quantities. Quality has certainly not improved. Only quantity and waste. Capitalists did not swoop down to rescue mankind from poverty by building factories. They robbed people of their independence. People would not need charity and benevolence of the rich if they were paid a fair wage for their labor, but Carnegie's essay is self-serving, using charity as the guise to justify everything he did to his workers.

Carnegie defends employing the masses at starvation wages, for people won’t know what to do with a good wage anyway. This means Henry Ford’s notion of paying people enough to be able to afford the cars they were making really was radical, and it proved Carnegie wrong. Not that I admire Ford; he was antisemitic and a Nazi supporter, among other things.

Carnegie was wrong about all of this, and his screed is the foundation on which Ayn Rand deified the founders of industry. This is the mindset we are living under today. People more or less quote this essay when they defend the rich:

“Well, you have an iphone and refrigerator, so how can you call yourself poor? A poor person 100 years ago would love to have what you have, therefore when we let the rich man do as he pleases, he raises all of humanity.”

Would they, knowing entire communities are being poisoned and impoverished to make the chemicals and the circuit boards that make those devices work? There is a way to make them without such side-effects, but it means profit cannot be the motive. All profit does is pile the money in the hands of a tiny group, and we apparently must hope they build us a park in return for giving us cancer.