Chapter XXIII. The Dynamic Economy of the Future

CHAPTER XXIII The Dynamic Economy and the Future Primitive savages know how to start a fire by friction. They must have discovered the process tens of thousands of years ago. Yet as lately as the middle of the eighteenth century scientists were still debating whether or not heat was a material element (an "indestructible substance"), though they were already experimenting with the steam engine. So a principle may be put in practice long before it is understood or defined. Therefore it is not strange if the obvious fact that a high production system works on a long circuit of energy has not been perceived and the general laws governing its creation and maintenance have not been formulated. Even the definition of energy stood in the way of understanding the conditions of its extended use by human beings for their own benefit. The definition is confined to measure by its effects; and no practicable design for mechanical apparatus can be conceived except in accordance with such measure. Nevertheless, it obscures the major problem of the utilization of energy throughout a production system j because man himself enters into the energy circuit he uses, and thus introduces a factor which does not answer to measure. As man has a triple function in the circuit, his intervention is triply confusing. Part of the energy is converted and transmitted literally by his physical body, in measurable quantity, as when a man pushes a wheelbarrow j but in the long circuit, or high energy system, this part is small compared to the quantity converted and used through inanimate materials. Another function of man in the energy circuit uses an extremely variable and practically nonmeasurable quantity of energy, in the intellectual effort of invention or discovery 280 THE DYNAMIC ECONOMY OF THE FUTURE 281 of devices to tap the universal energy; the returns from this are incommensurable with any possible estimate of the energy applied. Then the third function of man in his energy circuit comes into play, to cause even more confusion of thought on the subject. What man does in his third relationship to the energy circuit is to route the energy he has tapped and brought under control. The man pushing a wheelbarrow routes it by the same action, his mind sending the command directly through his muscles along with the force applied. There is an imponderable, but it cannot be separated from the ponderable direct force. When energy is routed on the long circuit, it is done by actions in which the force expended is not merely incommensurable to the result, but does not enter into the specific physical sequence of transmission at all.

This is what happens by the use of money, or by credit or other contractual agreements. There is a real, material, unbroken sequence of physical energy carried through in the long circuit of production, which is visible and easily traced. A farmer grows food; he sells most of his product and buys what else he needs, perhaps a tractor. The food has supplied energy to other men who dig ore, make steel, manufacture motors, build and run railways; innumerable other products enter into the sequence; but it is a physical succession of material objects in motion and in process of the conversion of energy, completing a circuit which brings back the tractor to the farmer, or maybe coffee from Brazil or tea from China or gasoline from Texas oil wells. There is no break in the line. But the continuity of the flow is not absolutely and precisely like that of a stream of water running downhill. Left to itself, the water would never run uphill; it must flow down. Yet man may intervene, with engineering devices, by which the full force of the stream is utilized to send a moiety of the water upward again. Likewise in the production circuit a train of cars is hauled uphill, against gravity, by energy which man has brought under control for that purpose. The train stops at stations, because man cuts the flow temporarily. It would 282 THE GOD OF THE MACHINE never have run in that particular channel "of itself," nor would it start again or continue in the production line without man in the circuit.

When the farmer sells his produce or buys a tractor, using real money, the imponderable is represented separately. The weight of the gold does not correspond to the weight of the tractor, nor does the energy exerted in handing over the gold correspond to the energy of the tractor in motion. If a check is given, so that the real existence of the gold may be overlooked, the nature of the transaction is still further obscured. But what occurs is that the energy in the continuous physical sequence is routed in a direction specified by a representative parallel action. Perhaps the easiest way to perceive the process is by assuming a production circuit much shorter and simpler than it could ever be in fact. Imagine the farmer, the miner, the steel maker, the tractor manufacturer, etc., standing in a circle, each passing his own product forward on his right, in one direction 5 while money is passed back on the left in the opposite direction, making payment at each transfer. The physical energy which constitutes the circuit is never in the money; it is in the goods and transport facilities. Further, the intervention of man in the circuit introduces a factor by which more energy is produced (or picked up) en route than is consumed (lost or dissipated). This cannot occur in any specific flow of energy which is not under human control; inanimate nature contains nothing equivalent to the action of man's mind, or to the parallel actions by which man routes such a flow. Nor can these functions be built into a piece of machinery. Forever they must require human intelligence and volition.

Though it is always morally wrong, slavery is possible in a low energy system and impracticable in a high energy system. The reason is evident if the methods of production are compared. A chattel slave is treated as a machine, driven by force; he may neither choose nor quit his work. Then take a job with high-power machinery, involving the utmost responsibility, where the consequences would be most disastrous if the worker THE DYNAMIC ECONOMY OF THE FUTURE 283 did quit at the wrong time; in just that job it is most necessary that he should choose to undertake it and be free to quit it when and as he pleases. To drive a locomotive, a man must first exercise intelligence and volition to qualify himself. He is then engaged on the free judgment of another man as employer. Thereafter, while at work, the engine driver must at every moment act on his own judgment. He will not quit while the engine is in motion, but if his judgment failed there could be no way to 'prevent him. On stopping at a station, if the driver should leave the cab and refuse to finish the run, it would be insane to compel him to go on. His decision must be accepted. Likewise, if the engine driver should appear to be unfit, the judgment of his employer (by deputy) must be accepted as sufficient to take the driver off the run. This is the nature of contract. The engine driver receives a schedule, which he follows as a rule, but if it were absolutely impossible for him to act otherwise, there would not be a railroad in operation within six weeks. For the very reason that the action of inanimate machinery is predetermined, the men who use it must be free. No other arrangement is feasible for a high energy circuit, in which services as well as goods are in exchange j and contract is the only relation which admits that arrangement. This is the meaning of the parallel representative sequence of actions, proceeding in reverse direction to the physical energy circuit $ these actions carry on the succession of voluntary agreements by which the energy is routed. Hence the inevitable breakdown of the long circuit in a "planned economy," which necessarily requires rationing, restriction, and compulsion.

An engineer cannot and does not attempt to alter or abrogate the laws of physics in utilizing energy 5 he works with them, to achieve his purpose. And in his inanimate mechanical design he can take into account only the strictly physical function of man. A wheelbarrow must be of such form and size as to be usable by muscle power. A motor car must have the necessary apparatus to start, steer, or stop it. The further functions 284 THE GOD OF THE MACHINE exercised by human beings who use the machinery in production do not affect the design of specific machines. But all three functions must be taken into account in the organization of the long circuit 5 and since this is also a sequence of energy in action, it constitutes a problem of engineering of a peculiar kind. Human beings who enter into that circuit for general production must have their physical sustenance out of it \ otherwise the circuit will break down. If men tried to do without food, they would not thereby be able to devote to end-use the energy supplied by the food 3 they would merely drop out of production. For this reason, it is absurd to assume that "sacrifice" is equivalent to production. The prevention of waste is another matter. But since the function of man in the circuit is not merely that of a physical body, the mere allotment of a subsistence measure of energy to be ingested by workers on compulsory jobs cannot maintain the circuit either, because it does not allow for the second and third functions which must be performed by man—invention or discovery, and routing the energy.

For the exercise of intelligence, on invention and discovery, a man must have some surplus materials, time, and energy, at his personal disposal, with freedom to seek whatever employment he prefers. For the exercise of volition, to route the energy in such channels that production will be maintained, every exchange of goods and labor must be made by free contract. The engineering problem then is to organize the long circuit for free men. The hook-up must be such that every man may change his place and occupation as he pleases within the whole range of possible choice, which is infinite. This calls for distribution of the product by a like method of exchange on agreement at each transfer. Given these conditions, the condition prerequisite to man's physical function in the circuit will prevail j the men engaged can get their livelihood from it by free exchange. The whole problem is solved by observing throughout the THE DYNAMIC ECONOMY OF THE FUTURE 285 principle of contract; and it can be solved in no other way.

Contract is the principle of the true dynamic economy. The one problem which may be said to have arisen from the dynamic economy is what is called the labor problem. Because the dynamic economy creates unprecedented means of mobility and a fair prospect of finding a livelihood almost anywhere, the great majority of people have forgotten the need of a physical base for security. It is not only the "workingman" who overlooks this primary and unalterable relationship of man to the earth, the function of private ownership in land—which goes back to the simple fact that a human body is a solid object—the technologists, clerical workers, plenty of urban employers, and people living on inherited incomes, are in the same position and equally unaware of it. It may be that these others outnumber the workingmen; but with large industrial centers, the workingmen compose a more obvious group, which is more readily distinguishable by the existence of labor unions and by the fact that, when industry slows down, the workingmen are most visibly affected. They are dislocated mass. But it must be understood that a millionaire could belong in that category, if his millions were entirely in paper securities; he has no base either. There is absolutely no solution for this except individual land ownership by the great majority, and the use of real money. It is not necessary that everyone should own a farm; but enough people must own their homes and have a reserve for "hard times." In the United States, if industry is allowed to follow its natural tendency to decentralize, it rests with individuals whether or not they will provide for their own security; but, in any event, there is no other way. There may be merit in proposals that the employees of industry should have some ownership-interest in it; but this does not meet the need of a base; the miller cannot stand on the running stream.

Whether intended to favor labor or to restrain it, labor legislation is worse than useless. The Wagner Act did not give any power to labor. No law can give power to private persons; 286 THE GOD OF THE MACHINE every law transfers power from private persons to government.* But beyond a certain point, such transfer of power may actually render government helpless, by making it pick up a load it cannot handle. That is what the Wagner Act did, and what any legislation attempting to control industrial labor must do. It attached an instrument of government to dislocated mass; and whenever that mass is disturbed, it must wrest the instrument out of control and thus nullify its function. (An army out of control does the same thing$ it may tear the whole mechanism of government apart.) Dislocated mass cannot be controlled, unless by opposition on all sides with an equal force. That is absolutely impossible with industrial labor, unless it should be always confronted by an army of equal force j which would reduce the nation to slavery.

But labor may be brought under compulsion—which still will not be control, and will only create a new danger—by restrictions nominally imposed first on the employer, reaching the employee indirectly. If an employer is forbidden to hire anyone who has not obtained permission to leave a previous job, the movements of the worker are restricted precisely as if he were forbidden to quit a job. The effect on the energy circuit is to cut down production in equal degree. The main present cause of confusion in political theorizing also arises from the fact that energy in the long circuit is routed by parallel representative action. Voting is such an action; but its effect is still less easily discernible, because it is a relay signal. When a country has a formal political organization, taxation is already authorized -y the channel is there, to divert energy from production into government expenditure.

* Labor leaders mistakenly thought they had gained a victory when what they called "yellow dog contracts" were outlawed. They do not understand the nature of law. The "yellow dog" contract was an agreement among employers not to deal with labor unions. However distasteful the classification may be to unionists, the fact remains that this is the same kind of an agreement as the closed shop contract} and if the law can forbid that type of agreement, then the closed shop contract can be outlawed. Contracts made by unions and employers have already been nullified by this power, against the will of both the union and the employer concerned.

THE DYNAMIC ECONOMY OF THE FUTURE 287 The channel is designated by custom or a constitution. Theoretically a constitution might specify the sum or the percentage to be taken in taxes; but such a limitation is unlikely to be maintained, least of all by the central government which necessarily has the conduct of war. While the structure is sound, stipulations will be observed as to the several fields of taxation for federal, state, and local authorities. The regional interests will tend to preserve this limitation and to keep the rate of taxation reasonable, as long as they have the proper structural relation to the central government. But taxes will be collected no matter what party or persons hold office. Therefore the vote of the citizen does not route the energy. What it does is to designate officials who shall by like representative action determine the quantity of energy to be taken in taxes and then apportion and route it into the various political channels of expenditure.

Because two representative actions occur, it is not generally realized that they give the signal for the impounding and release of real energy 5 and further, that such energy can be turned directly against the voter. His only safety is to retain for himself at all times a fixed standing ground on which he may resist firmly; and there is no such standing ground except land he owns himself. Otherwise his vote actually deprives him of his natural power, instead of enabling him to exercise it. This is what happens in democracy; it releases force in such manner that there can be no control. For the government has no control either in a democracy. The theory that everyone "participates" in government in a democracy, if everyone votes, does not take into account the nature of physical force and the necessary relation of all physical mass and movement to a solid base. Most abstract theory of government in modern times is completely erroneous because it ignores fhyskal reality. Probably the fallacy becomes plausible because the ballot is only a piece of paper, or a touch on a voting machine; no physical energy is transferred in the act of voting; it appears to be no more than 288 THE GOD OF THE MACHINE an expression of opinion. Then if the representative takes office simply on a formal expression of opinion, or signal, it is thought he must be amenable to subsequent opinion in like form. On the contrary, since the representative is permitted to release real physical energyy no further signal will be obeyed unless the voters retain in their "private control a corresponding but preponderant power of resistance to any misapplication of the power delegated to their representatives. The representative parallel actions must always represent real energy.

There is also a prevalent fallacy today, which is brought up in denial of the necessity of individual free action to create and maintain a high energy system. In some comparatively free economies, such as Denmark and Sweden, much of the economic organization consists of co-operative associations. But these are marginal to the dynamic economies. Semi-socialistic colonies, such as New Zealand and Australia, are even more dependent on individualism elsewhere. They originated none of the machinery by which they obtain production at a level of comfort 5 they have contributed no inventions or improve, mentsj they sell their surplus product in the free market. The connection enables them to attain a moderately high standard of living, but the level is fixed by the dynamic circuit they draw on. Superficial observers pretend that co-operative associations can supply the primary dynamic function of high production. They cannot 5 they are only supplementary. Local conditions will indicate the extent of their practical utility; but it is always marginal.

A completely "planned" economy, which is a slave economy, can take in some high-power machinery, running it with diminishing returns for a limited time, into a war. The slave economies of Soviet Russia and Germany have done this 3 but neither of them can maintain their mechanical equipment without continual replacements from free nations. With a complete factory for the production of motor cars, every part made in the United States, shipped to Russia, and assembled there in efficient order by American engineers, the output was less THE DYNAMIC ECONOMY OF THE FUTURE 289 than half the normal production from a similar set-up in the United States. Russia, Germany, and other planned economies are static. When high energy is thrown into them, it can only cause incalculable disturbance in unpredictable ways, like the tremors and subsidences of earthquake terrain j but the damage will be much less, if the high energy is admitted only by exchange—that is, if payment is duly exacted by the free economies for loans or sales of goods to the static economies—than if money or machinery or other goods are obtained by the static economies without payment. Since by the nature of the free economy, its product is in the market, it is imperative that the bills should be collected. When money, credit, and goods are handed to the static economies for nothing, whether as a gift or by allowing default, the result is certain, a world war on a commensurate scale, with increased and hopeless oppression of the people of the static economy. Nothing else made the German outbreak possible. Nothing else could have ruined Europe. If the sums of money loaned by America to Europe since 1914, and never repaid, were added up, the total would give the force of the explosive charge which burst in the present war. Loans from governments to governments * are peculiarly and inevitably destructive j but defaulted private loans are also wholly harmful. This holds true to the amount involved of American investments abroad which have been confiscated by foreign governments 5 the force is then thrown against whatever private economy that foreign nation had, to smash it; the government has obtained supplies over which the producers have no control. Just on that formula, disturb* Loans made by one government to another do not answer to any of the proper conditions of credit. The money lent belongs to the people of the lending nation, not to the officials who grant the loan; and it becomes a charge upon the people of the borrowing nation, not upon the officials who negotiate the loan and spend the money. There is no collateral, and no means of collection by civil action. If the debt is not paid, war or the threat of war is the only recourse. Meantime private production is wrecked; the economy of the lending nation has to meet the capital lossj while the economy of the borrowing nation is loaded with the dead "weight of government projects (buildings, armies, etc.) for which the money is spent. It is an infallible formula for disaster.

290 THE GOD OF THE MACHINE ance and devastation could be charted in advance. Nations in habitual default are invariably nations in habitual convulsion. The one real service a dynamic nation can render to a static nation is to exact prompt collections in full for every penny or scrap of goods supplied. If that is done, the static nation may advance toward freedom. If it is not—the result is before our eyes. The theory of "historic necessity," on which collectivist argument relies, has no support in fact or principle. The theory is that economic development occurs in an inevitable succession of phases, by which an industrial society, inventing machines on a basis of private property, must then pass into Communism, with public ownership, while retaining the machines for production. So it was prophesied that Germany and England, being highly industrialized, must be the first to turn communistic. Instead, the most backward nation in Europe, Russia, which had never fully emerged from Communism, lapsed back into it 5 and meantime the United States had outstripped Europe industrially. A feeble excuse was patched up, which had no more sense than the original theory.

As long as this universe lasts, the conditions in which a machine economy can be created and maintained are unalterable j and they exclude collectivism. One variation of the "historic necessity" theory is that "human nature can be changed." If that were true in the vital characteristic, so that men lost the right of liberty and the desire for it, those "changed" exhuman beings would thereby become incapable of inventing and operating machines. The inventions of man are of the spirit, not of materialism; and it is a crime against humanity to take the products of that divine endowment and throw them to the slave-drivers of Communism, to be trampled in the filth of a barracoon. Because man is not deterministic, there can be no set order of his discoveries. Progress is always possible, but it depends upon the unpredictable use of intelligence. From the known record, it does not appear that men have ever wholly lost any THE DYNAMIC ECONOMY OF THE FUTURE 291 important body of knowledge once attained -y though it might lie unused for a time, until the moral principles were affirmed by which material science could be applied beneficially. The precedence of the moral order is clear, since useful discoveries occur only when men secure liberty by restraint of the political power. Such discoveries were made at various times and places, and brought together -y but the principles involved are universals. They do not change with "history." Whenever and wherever they are understood and applied they will work, always in the same way. If they are forgotten or ignored, nothing can be achieved. There is no "wave of the future" $ humanity shapes its future by moral purpose and the use of reason. Faith in the benevolent omnipotence of government is pure superstition, an aggregate residue of all the "magical"

practices of primitive man. As in nature a savage does not know what makes the salmon run in spring, or why game is scarcer one year than another, it is not extraordinary that he should have sought to propitiate some power in nature, expecting a return without a rational cause. This vague expectation of benefit from an invisible power persuaded by words of magic has been transferred to the idea of an abstract agency placed above the individual, and amenable to words, for the gift of material benefits. But it is actually a complete retrogression, in one gigantic stride, toward darkness and extinction. The most extreme fallacy is to believe that nothing can be done, that we must drift to disaster and accommodate ourselves to it. If that were true, we must die in heaps, with a miserable remnant reverting to savagery j for there is no compromise. But it is not true. Everything can be done for a living future, if men take the long view by which the long circuit of energy is created. Not even disaster by temporary negligence need be final. With the establishment of the Republic of the United States of America, a great landmark in secular history was erected. The most profound scholar of the past century, Lord Acton, who de292 THE GOD OF THE MACHINE voted his life to study of the history of human liberty, said it "was that which was not, until the last quarter of the eighteenth century in Pennsylvania." The event he denoted was unique in that it was the first time a nation was ever founded on reasoned political principles, proceeding from the axiom that man's birthright is freedom. And as long as those principles were maintained, it succeeded beyond all precedent. Until then, nations were formed by chance and circumstance and doubtful experiment 5 then if a nation sank, it was impossible to reconstruct it. No matter how often a democracy might be tried, it must shortly collapse into despotism. Or if an aristocracy or monarchy developed, and subsequently broke down, another could not be created to take its place, since men could not go back in time to secure the line of descent. But a federal republic with no hereditary element in the political structure can always be reconstituted by design on the same principles and bases.

Whoever is fortunate enough to be an American citizen came into the greatest inheritance man has ever enjoyed. He has had the benefit of every heroic and intellectual effort men have made for many thousands of years, realized at last. If Americans should now turn back, submit again to slavery, it would be a betrayal so base the human race might better perish. The opportunity is equally great to justify the faith which animated that long travail, and bequeathed them such a noble and happy heritage.