State Control

IV. The establishment of civil and economic liberty even within the limitations set by the more progressive governments, notably those of the United States, Great Britain and France, brought results not wholly favorable to the welfare of certain classes of individuals. While the world grew rich with unprece dented rapidity, the wealth tended to accumu late in the hands of a somewhat limited few.* The rank and file, although living in compara tive affluence compared with their former status, still remained poor. In the defense of the new system a great literature was created, among which Adam Smith's Her bert Spencer's Statics> and the versus the State,> and Bastiat's Economiques,> should be especially mentioned. Notwithstanding the intellectual triumphs achieved by each of these able defenders of the new order, abundantly supported by hosts of lesser lights, the accumulative unfortunate effects of excessive economic freedom became too pronounced to be longer ignored by the various states and, therefore, beginning about 1830, the tide began to turn in favor of larger state control. To relieve the situation without at the same time changing the established order became the chief object of the political leaders in England, France, Germany and the United States. Palliative measures, such as the Eng lish Poor Law of 1834, centralizing and stand ardizing the administrations of charity, abol ishing out-of-door relief for the able-bodied, reinstituting the workhouse test, regulating the length of hours and the conditions of em ployment for child labor, were concomitantly tried. Such measures, however, were largely ineffectual because they failed to strike at the root of the trouble, and naturally enough, atten tion was more and more directed toward a study of the causes which were producing the unfortunate and unsatisfactory results. As the investigation progressed the students of the social order almost immediately separated into two classes: first, those who deemed it wisest to destroy the existing system and inaugurate an entirely new one; second, those who pro posed to preserve the fundamentals while elimi nating certain non-essential features which had been found to be injurious to the common welfare.

The first group of reformers almost imme diately divided into two branches, the Owenites and the Marxians. The Owenites, followers of Robert Owen, established a large number of independent communistic societies, the most of which soon disappeared and the Owenites with them, although their ideals are still of large influence. The Marxians, on the other hand, although since 1848 continuously exercising large influence on political and economic theory, have never until the present war, except in a very small way, had an opportunity to give their solution a practical trial. With the downfall of the Russian Revolution and the subsequent creation of the Bolshevik government, they have established a laboratory for the practical test of their ideals. If this experiment in industrial and social reorganization should prove able to produce goods as abundantly and at the same time distribute them more fairly than the capitalistic system, the latter will for the first time in history have encountered a real com petitor. The adherents of the present system will in the latter event be under a stronger pressure than ever before to institute a sufficient amount of governmental control to insure that the products jointly produced shall be fairly distributed among the factors of production.

The second group of reformers, while at tempting to maintain the competitive capitalistic system for the sake of its great efficiency in production, have at the same time desired to introduce a sufficient amount of state control to secure what they considered a high degree of fairness in distribution. Their efforts have been centred upon certain critical problems of which the following are the more important: (1) Protecting wage-earners (a) against un favorable conditions of work and (b) against inadequate wages.

(2) Protecting consumers by (a) preventing the establishment of industrial monopolies; (b) by maintaining free competition among business enterprises, and (c) maintaining stand ards in the character of the goods which are produced and sold.

(3) Creating systems of taxation which, while providing abundant revenue for the uses of the government in undertaking and main taining state control, will at the same time act as an adjusting force in the distribution of wealth.

1. (a) It was early pointed out* that while the laborer was legally free to work for whom he pleased and could refuse employment where conditions or wages were unfavorable to him, the employer could generally wait until the terms he offered were acceptable, while the laborer generally could not; that, while the employing classes were living on their capital the employees were starving; that consequently the state ought to interfere on behalf of the laborer, prescribing by law the conditions under which the work might be carried on, and in certain cases at least the wages at which the laborers might work. It was further noticed that the economic independence of the laborer was largely conditioned by the character of the industrial organization, and that wherever ma chinery was largely employed the relative ad vantage of the employer was increased. On this account regulation in behalf of the laborer began earlier in the machine trades and in those countries where machine production was most widely used. England, being the first to introduce factory production on a large scale, naturally encountered the labor problem first, and it is there that the foundations of the pres ent system of state control in the interests of labor were laid.f In the United States the labor problem attracted little attention until after the Civil War. In 1869 Massachusetts created the first labor bureau* in the world, and following her example a large number of the States in the American commonwealth have established similar departments, manned by a considerable force of inspectors and adminis tering laws which are intended to protect the laboring classes from work under conditions unfavorable to either health or morals. In the case of certain classes of labor the maxi mum number of hours which the laborer may work has been prescribed by law. As a result of state control in this sphere of action it has come to pass that the conditions under which the American laborer works are fairly conduc ive to good health, to a reasonable standard of morals and to a fairly long life.