Philosophy of Democratic Government / by Yves R. Simon

Equality Versus Exploitation

It was recalled above that freedom has distinct meanings in distinct orders of causality. So far as the final cause of government is concerned, there is freedom when government is exercised solely for the common good or for the good of the governed; if government is exercised for the private good of those in power, the governed are slaves. The condition of slavery is thus defined by the union of two intelligible elements: (1) a legally recognized authority relationship (of master to servant), whose distinctive purpose is (2) the maintenance of the master's private good by the servant's labors.

Either element of this definition procures a foundation for a variety of degrees. As history shows, the direction imposed by the master upon the servant may be more or less comprehensive and more or less necessitating (1), and the part of the servant's labor dedicated to the master's private good may be smaller or larger (2). When both elements are at or near a minimum, the word "slavery" sounds improper; "servitude" and in some cases "serfdom" are preferable.

Among those subject to authority, the slave is thus distinguished by the alienation of his effort. A related idea is expressed by saying that he is being exploited by his master. Let us reflect upon the crucial concept of alienation, which, as evidenced by great intellectual catastrophes, is not free from confused interpretations.

There can be self-sacrifice and the last measure of devotion without there being any degree of alienation. (Socialism, in its fight against the alienation of human effort, too often took for granted the exaltation of the ego contained in the formulas of its predecessor, liberal individualism.) There is no alienation when I work for my wife and children, for they belong to me; no alienation when I work for the one I love, because the beloved is another self; no alienation when I work for our community, for I belong to it and it belongs to me and its good is not, by any means, alien to me. Above all, there is no alienation when I work for God, for he is more interior to me than I am to myself -- a sublime truth familiar to metaphysicians and to mystics as well, but both Proudhon and Marx missed it completely. Whoever seeks his own self away from God undergoes precisely the worst kind of alienation. And whoever surrenders his self for the love of God finds himself in God and eternity.

There is alienation in the case of the slave as just defined; slaves are unpaid labor, which means that they are not recompensed for their work but are merely given maintenance. There is also alienation in the case of the ill-paid wage-earner. By saying that he is ill-paid, we imply that his wage is not equal to his work; thus part of his work is dedicated, in involuntary fashion, to the welfare of a private person, his employer. There is alienation in the case of the small truck-farmer when market prices are so low that he cannot make a decent living out of the sale of his vegetables. There is alienation in the case of victims of usury, including tenants who pay too high a rent. There is alienation in the case of consumers who pay excessive prices for any commodities or services. These people are not slaves, inasmuch as the alienation of their labors is not established by a legal relation of authority. We thus come to understand that the exploitation of man by man can be managed in either of two ways: (1) through an authority relationship sanctioned by law or (2) through unequal exchange. No legal formula compels the wage-earner to remain under the authority of the employer; the small truck-farmer is not under the authority of his customers, the debtor is not under the authority of the creditor, and the tenant of a house is not under the authority of the owner. But, like slaves, these people undergo alienation when they have to be content with processes of exchange in which they give more than they receive, which means that part of their contribution is, involuntarily, given for nothing to another person. It would be arbitrary to describe as slavery the situation brought about by unequal exchange, but it often can be described as a sort of servitude.

According to such a witness as Tocqueville, the history of freedom is, to a frightful extent, the history of a conflict between freedom and equality.{13} Be that as it may, there is one case at least in which freedom and equality, far from conflicting, agree, coincide, and become indistinguishable from each other. It is the comprehensive case of freedom as opposed to servitude, of freedom from alienation, of freedom from exploitation. The work done yesterday by a slave may be done today by a free laborer; suppose, for the sake of clarity, that the latter receives a recompense fully equal to his service. Transition from the state of the slave to the state of the normally paid laborer signifies, undividedly, achievement of freedom and achievement of equality. If inadequate wage maintains inequality, the legal abolition of slavery and serfdom, for having failed to end exploitation, would be described as having failed also to end servitude.

In rough outline, the social history of modern times is dominated by two great revolutions. The first began in the late eighteenth century; its main parts are over, although it is still going on, and still has to go on, in some countries, for a long time. The second had hardly begun before the first World War; we know that it is going on; we know that it is still very far from termination; whether it is still in its initial stage or is already beyond it we do not know. Giving these revolutions names is an embarrassing duty. If the first is called the "democratic" revolution, a few questions are begged with regard to the second; and if the second is called "socialistic," more questions are begged. Let these terms be used, if indispensably needed, in purely conventional and provisional fashion. What relation there is between these two revolutions is by no means obvious. Some historians perceive mostly resemblances and continuities, others contrasts. Some would say that they are merely two phases of one and the same revolutionary process. They certainly have in common a feature of central importance: in either case there is a question of putting an end to a system of exploitation or alienation.

The democratic revolution asserted with great vigor the proposition that political government is dominion over free men; it endeavored to destroy the myths and practices which had, to some extent, corrupted civil government into a master-to-servant relationship. It also opposed with success processes of alienation connected with the division of society into castes and orders, with slavery and serfdom. But it did little about processes of alienation that had no special connection with political structures, with the aristocratic constitution of society, or with institutional servitude. It even seems that in countless instances it released forces of exploitation that the old regimes used to keep under control.

As a result of the democratic revolution, which abolished slavery, serfdom, and feudalism, unequal exchange became the main factor of alienation. It was often noticed that liberalism brought down to a minimum gratuitousness in human relations. Such a thing as the free distribution of wealth, which played a considerable part in more primitive economic systems, was excluded from normal relations, except within the limits of a narrowing family circle. Beyond these limits the communication of wealth had to be effected by way of exchange alone. With economic transactions reaching unprecedented magnitude, alienation through unequal exchange assumed overwhelming importance at the time when alienation through legal bondage was formally abolished and factually declining.

It is axiomatic that exchange is just if, and only if, the exchanged values are equal;{14} then, and only then, the partners treat each other as equal; then, and only then, both are free from alienation and exploitation. Here justice is equality and freedom, and all is ready for the growth of friendship. On these principles there can be no disagreement among honest persons. But the question is pervaded by anxiety as soon as the problem of recognition is envisaged. What values are equal? What is the criterion of equality of value? Here are a farmer and a shoemaker; exchanging wheat against shoes is for them the most natural thing in the world. But what weight of wheat equals in value a pair of shoes? We certainly can define an insignificant amount of wheat and know for sure that it is inferior in value to a pair of shoes; and we can define a huge amount of wheat, such that nobody would doubt that it is worth more than one pair of shoes. Between the insignificant and the huge the distance is hopelessly wide.

We have already called attention to the difficulties of the problem of recognition in ethics. These difficulties cover the whole domain of moral life; we like to think that there are safe regions in which the right and the wrong are recognized without any special inquiry; this is an illusion, possible under ordinary circumstances, violently shaken in wars and revolutions as the identities of things and persons become uncertain. To know crime from virtue in time of war, I need to know whether this war is just; assuming that it is, I still do not know crime from duty so long as I do not know whether these shadows are enemies, friends, or nonbelligerents. Common behavior in wars and revolutions shows that when the problem of recognition becomes exceedingly difficult, most persons give up all interest in the answer and soon come to ignore and to deny the problem itself. Let us be allowed to express this hypothesis: the adventures of human conscience, with regard to equality of values, are partly to be understood as an effect of fatigue and discouragement. In the wars of our time resignation to indiscriminate destruction of life often resulted from the difficulty of determining who is a belligerent. For lack of a better criterion, fliers would treat as belligerent, at the cost of many innocent lives, anything that moves within a distance of twenty miles behind the enemy lines; such a rule of action shows that hope of finding a working criterion has been given up. We are suggesting that with regard to equality of values most men use or are ready to use, without circumstances being upset by any war or revolution, almost any conventional criterion, no matter how crudely inadequate, out of a sense of hopeless difficulty and out of a biological realization that life cannot wait and that exchanges must go on.

In an economy using money as an instrument and measure, the problem of the equality of values becomes the problem of the just price.{15} Among the methods employed in the determination of prices, that of the market enjoys an obvious privilege. It is assumed that the best possible way to obtain a fair estimation of the value of a service or a commodity is to leave it up to those whom it directly concerns, i.e., prospective purchasers and sellers. They meet in a public place and a deliberation goes on, with clashes and compromises, mutual pressure, mutual control, and control by the public. It is not claimed that this method enjoys any kind of indefectibility. it would be granted that in each particular case it probably falls short of the rule of justice; but it is held, not unreasonably, that casual influences work one day in one direction, another day in another direction, so that in the long run the rule of justice is approximated as closely as it can be by any human method. Under exceptional circumstances prices are fixed by government decree; this, too, is not a procedure free from risks, and it may be held that in many respects, especially with regard to the protection of liberty against government arbitrariness, the risks of the market system are lesser than those of price-fixing by government decision.

What does honesty mean to a businessman operating under the market system? Let us suppose that he is a person of uncompromising righteousness. In order to know what he has to do, to what sacrifices he has to consent, and what returns he can expect, he merely has to know about the situation of the unsophisticated market. The most common temptation of dishonesty regards operations calculated to sophisticate the market. One may, for instance, spread false news or overemphasize the significance of an actual fact in order to have prices go up or down at will. There is also sophistication of the market when a group of businessmen sell at abnormally low prices in order to get rid of a competitor. So long as the market price genuinely expresses the conclusions of a deliberation between prospective purchasers and prospective sellers, buying and selling at the market price is buying and selling at the just price, is far as it can be determined under the circumstances.

Since prices change, the system implies the possibility of making profits without performing any operation except purchase at a low price and sale at a higher price. This defines "commerce." But a tedious experience of idle discussions makes it necessary for us to elaborate on this definition. Economic subjects lend themselves so nicely to rhetoric and dogmatism that people who would not fail to grasp the meaning of an abstraction, say, in chemistry, can talk indefinitely to demonstrate that they have not understood the meaning of an ideal type in economics. When a physician says that some conditions demand a diet free from sodium chloride, he does not imply that the thing contained in the saltshaker is ideally pure sodium chloride; he does not even imply that it is in the power of any chemist to isolate one gram of NaCl without any admixture of any other chemical; all that he implies is that there is a relation between the ingestion of a chemical essence symbolized by NaCl and the evolution of a disease, so that, in so far as the patient ingests NaCl, whether in a pure form or in mixture, he can expect to undergo such and such symptoms Now, when the century-old definition of commerce just recalled is voiced in certain circles, it is tempestuously objected that a merchant patterned after this definition is a mythical character impossible to find in the world of experience (a fiction of philosophers and theologians, just as NaCl is a fiction of chemists). It is argued that between the purchase and the sale the merchant produces space utility (e.g., if he moves grapefruit from Florida to Quebec) or time utility (e.g., if, just by keeping merchandise in his basement, he transforms new wine into old, or butter in July, when cows have plenty of milk, into butter in January, when milk flows less abundantly). If it were not for the literary habits of thought commonly exercised on such topics, it would be clear to everybody that in so far as a man creates space utility by moving a commodity from a place where it is plentiful to a place where it is scarce or time utility by keeping a commodity from a time when it is plentiful to a time when it is scarce, there is no question of describing him as a merchant; he is a producer of utility, just as is a woodcutter or a miner. The relevant question is this: Over and above compensations obtained for such services as woodcutting or coal mining or space utility-producing or time utility-producing, is there such a thing as a profit corresponding to no production at all, but merely to an advantageous difference between price at the time of the purchase and price at the time of the sale? If such a thing exists, commerce exists and is definable, and the description of its laws is relevant both in a theoretical sense and in a practical sense, whether or not there exist individuals specialized in commerce and determined not to produce any utility under any circumstances. The thing contained in the saltshaker is certainly not pure sodium chloride, and the thing contained in our atmosphere is certainly not pure oxygen. To deny the reality of commerce, as defined above, for the reason that most or all businessmen produce some utility is as good logic as to deny the reality of oxygen for the reason that in our atmosphere the molecules of nitrogen are the overwhelming majority.

For the sake of clarity, we are going to consider the abstraction of the pure merchant, just as a chemist considers the abstraction called NaCl without having to decide whether or not it is possible to realize this abstraction in a state of absolute purity. What does profit mean in relation to the law of commutative justice, which is one of strict equality between the exchanged values? This is the problem.

It is necessary to subject the commercial practice to a twofold examination. Let us consider the merchant, first, in the exercise of an individual act of buying or selling. Provided that the rules of the game are observed, viz., provided that the market has not been sophisticated in any way, the purchase is just and the sale is just. So far as we can know, the money that he gave up when he bought was equal in value to the commodity that he acquired, and the money that he received when he sold was equal to the commodity that he sold. There is in the school of Aristotle a great deal of diffidence toward commerce even when it is not accompanied by any sophistication of the market, for the mover of commercial activity is the desire to make money, and this desire contains a threat, inasmuch as its immediate object does not impose on it any measure. If I desire such real wealth as food or shelter, the very nature of the thing desired involves a principle of measure: one house in town and one in the country are about as much as I can enjoy, and the amount of proteins and carbohydrates that I can use per unit of time is contained within very narrow limits. On the other hand, it takes no particularly perverse disposition to experience unmeasured desire for money. Precisely because money is means in the second power, means in view of means and instrument in view of instruments, it presents the desire with no specification and no measure. From this it follows that profit-making is always a disquieting and risky proposition. However, Aquinas and other great theologians explain that honesty can be preserved in commerce if specification and measure are supplied by the ends to which desire for money is subordinated.{16} Taking advantage of a difference in price on the unsophisticated market is an action which does not possess its justification within itself; it is not good of itself; but it is not, either, bad of itself, and it may receive from the appropriate end the justification that it does not possess in itself. Taking advantage of a difference in price in order to support one's family or to relieve the needy is a perfectly justified action. Its justification does not spring from its own nature; it springs from the end to which it is related. Such justification by the end is possible because there is nothing intrinsically evil about a purchase and a sale at the market price.

A distinct and supplementary approach is effected when we consider not individual acts of purchasing and selling but the general relation of the merchant to society. Let us suppose that a businessman reaches the end of a life characterized by skill and honesty. He never indulged in practices designed to sophisticate the market, but he was so skilful and so lucky as to gain much more than he lost. He has acquired a large amount of property through a series of operations each of which was absolutely fair. But, assuming that he has been a pure merchant, by no means a producer, it is plain that, if his career is considered as a whole and related to society, there has been between this honest man and society no real exchange. All the wealth went one way. Through a succession of actions each of which was entirely lawful, wealth leaked out of society. Exchange has been more apparent than real. Notice, further, that what happens most clearly in the case of the pure merchant, happens no less really in the case of the mixed character whose income is made partly of compensation for his services as a producer and partly of profit. The significant fact is that, in a system which identifies the just price with the unsophisticated market price, wealth leaks out of society through operations each of which is perfectly legal and lawful. The significant fact is that the market system makes for the permanent possibility of a leak without there being dishonesty on the side of any partner. The significant fact is that, if the operation of the genuine market is accepted as the safest way to approach the determination of the just price, burglars, robbers, brigands, and swindlers are unnecessary to cause wealth to leak out of society: the regular and perfectly honest operation of the system suffices.

To sum up: nobody questions that exchange is just if, and only if, the exchanged values are equal. The whole problem is to measure values in such a way as to know what values equal what values. The answer that the just price is identical with the market price, provided that the market is unsophisticated, may not be the last word on the subject, for the market system admits of one-way transactions and illusory exchanges. The least that can be said is that greater accuracy in the determination of the just price is highly desirable, if it can be achieved at all.

Since there is no reason why constructs should be less lawful and less useful in philosophy than anywhere else, let us indulge in the construct of a businessman of such unusually exacting conscience that he wants to sell merchandise for what it is, instead of following the common rule of taking as much money as possible from the customer within the limits of the unsophisticated market. His first concern is to determine his cost of production. Suppose that this virtuous man is an innkeeper and that the commodity whose cost of production he would like to know is the use of a particular room for one night. Let us try to understand what operations and what difficulties are involved in determining the cost of production of such a commodity. Some entries are very clear, some are essentially obscure. It is easy to know what figures should be entered for rent, fire insurance, taxes, interest, etc. The figure to be entered for wages is less certain, but, except in time of inflation, the margin within which it is contained is rather narrow. But I have also to enter my own salary, and here, according to the familiar paradox of prudence, there is no chance to know the truth except through the influence of virtue. The customary view is that I can look for the highest possible remuneration so long as it does not involve any violence to my associates or any sophistication of the market. To say the least, such a view cannot be expected to deliver the most accurate answer to the problem of the just price. The way to the answer is a deliberation in terms of human needs conducted in a disposition of entire generosity. Covetousness and pride would make me feel that no income is too big a reward for me; but temperance and humility cut the figure down. Fear would incline me to overdo the amount to be set apart for purposes of security -- in fact, it is the craving for security more than lust for pleasure that causes the evil of boundless desire. Thus fortitude is needed in order that desire for security should not cause me to trespass the boundaries of the just price. The ultimate rule is an estimation of human needs, and this estimation cannot be effected without the unique light that proceeds from virtue. It goes without saying that it is only for the purpose of simplicity that we are imagining a solitary research by an individual conscience; such deliberations have to be conducted, so far as possible, by the wisdom of society. Yet ultimately there is always some amount of indetermination to be actualized by the operation of individual prudence, and it is not possible to disregard entirely, no matter how much we would like to do without it, the trivial consideration that there cannot be justice in society without a minimum of good will in the individuals who make up society.

Let human needs be divided, according to tradition, into those which are biologically determined (necessarium vitae) and those which are sociologically determined (necessarium status). With regard to the former, science and technology have brought about significant conditions of extraordinary novelty. For one thing, the appreciation of these needs has become subject to fast change; for another, the change always takes place in the same direction, inasmuch as the more recent view is more exacting than the less recent. Our children are reputed to need, in order to survive and to keep well, a huge amount of costly things which fifty years ago were considered luxuries or were totally unheard of. From the point of view of the present inquiry the most relevant fact is that the increasingly high estimation of biological needs entails equalitarian consequences. The case can be simply described as follows: Assuming that society is determined to assure the satisfaction of biological needs, let us compare a period in which biological needs are measured by 2 units with a period in which they are measured by 20 units. Since biological needs are, roughly, the same for all, higher estimation causes a greater amount of wealth to be distributed equally. As the estimation of the biological minimum goes up, technology makes it possible to procure this increasing minimum for all. So long as low production ruled out the distribution of the biological minimum to all, the estimation of this minimum was likely to be much below the truth; it is heartbreaking to declare, as necessary to life, commodities that one knows to be far beyond the range of most of one's fellow-citizens. Abundant production, whether it be a fact or merely a technical possibility, pushes up the estimation of the biological minimum by making the expert free to heed all the suggestions of experience.

With regard to the needs resulting from a social state of affairs, let us first remark that they are sometimes as imperative as items included in the biological minimum. For many men it is easier to do without their full ration of calories than to do without a white shirt. Thus no notion of luxury or futility should be systematically connected with the concept of merely sociological necessity.

Here is a telling fact: whereas the estimation of biological needs has steadily gone up in recent times and, by going up, has brought about equalitarian consequences of great significance, awareness of needs connected with social rank has declined in significant respects; and this also entailed equalitarian consequences. These two movements with one effect favor each other; that is, as more units of wealth are assigned to biological needs, fewer are left for needs of merely sociological character, and, as fewer units of wealth are assigned to "conspicuous consumption," more are left for the salvation of human life. What we mean is not that the total ratio of wealth allocated to sociologically determined needs has declined; in democratic mores the common people have social obligations which, taken as a whole, are extremely costly (decent apparel, good-looking homes, clean lawns, etc.); the significant change concerns the needs connected with high rank in society. The rationalism of democracy produces here its most certain and least harmful effects. So long as expenses declared necessary on account of rank are moderate (e.g., white collars for office workers), they admit of rational justification; but, in order to believe that one's social status imperatively demands a huge sacrifice of wealth -- at the cost, possibly, of human lives -- one's view of social hierarchy must be colored by mythological belief. The aristocracy-aping bourgeoisie of the nineteenth century gravely took over the nonrational postulates which made it possible to enjoy murderous expenses of conspicuous consumption with a feeling of mere submission to the eternal laws of the social order. It is worth remarking that little was accomplished, in this connection, by the democratic revolution, or by its first phase. A good sign that a new revolutionary phase is irresistibly going on is that it has become impossible for men possessed with a normal conscience to understand how pleasure can be found in meals as costly as those which were such an important part of social life for the upperclass gentlemen of the Victorian era.

This is how a philosophy of human needs -- which implies, of course, a whole philosophy of human destiny -- has a central part to play in the computation of costs of production. The social conscience of the nineteenth century revolted against the treatment of human labor as an item of merchandise. But if human labor ought not to be treated as an item of merchandise, no item of merchandise ought to be treated as a mere item of merchandise, for there is always, at the core of the cost of production, the recompense of human labor and the answer to human needs. Incorrect estimation of human needs, one way or the other, entails error concerning the cost of production, inequality in exchange, rupture of balance, alienation.

But suppose that the cost of production of a service or commodity has been exactly computed. The construct of the virtuous businessman can be of further help, for a question of no negligible importance remains to be examined. Is the just price equal to the cost of production? There is a strong appearance that it is. Once more, justice in exchange is nothing else than the equality of the exchanged values. Does not equality demand that the sum surrendered by the purchaser be no greater than the total cost of the commodity purchased?

If producers sold their products at a price equal to the cost of production, they would set a fine example of disinterestedness, but society would not be well served, for there would be no provision for two social needs of the most essential character, viz., capitalization and free distribution. The meaning of capitalization is clear, but in oral discussion of these ideas I have had many opportunities to notice that the expression "free distribution" fills minds with horrifying pictures related to that of the wealthy man showering bills, from a window, upon a cheering crowd. Free distribution is, indeed, fittingly defined in opposition to exchange. Wealth is made available to the consumer in either of two ways, according as the surrender of equal value is or is not the condition under which wealth is made available. In the first case there is exchange; in the second case wealth is distributed freely. Upset souls are generally pacified not by this definition or any definition but by examples leading to the realization that in the daily life of our societies a huge amount of wealth is distributed freely, that the survival of our societies without extensive processes of free distribution is absolutely inconceivable, and that an economic system in which wealth is made available by way of exchange alone has never existed (although societies tended toward it in the golden age of liberalism). Let it be recalled, further, that abundance causes exchange to be more insufficient than ever as means of distribution. As a matter of fact, we are constantly using a hundred ways of maintaining scarcity, for we know well that, under the circumstances, abundance or some forms of it would entail poverty.

Thus the hypothesis of the price equal to the cost of production leaves unanswered the question of capitalization and that of free distribution. It takes little imagination to find a solution to both these problems and to the problem of determining the cost of production as well: in an extensive system of state ownership, public powers fix prices and have a monopoly on capital and on free distribution. It is the government which distributes relief, education, family allowances, bonuses of all descriptions, and free room and board in its army and in its concentration camps. Nothing can prevent state bureaucracy from determining the just price of each item of merchandise as equal to the cost of production, plus a certain ratio for capitalization and another ratio for distribution. Wealth no longer leaks out of society through unequal exchange; any amount of money paid over and above the cost of production is assigned to functions of capitalization and distribution directly and exclusively relative to the public welfare. Alienation has come to an end. By keeping effectively all wealth within society, such a system properly deserves the name of "socialism."

It is important to recall the ideas which were commonly held on the subject of the state at the time when socialist doctrines were constructed. The background of socialism in the nineteenth century is constituted by economic and political liberalism, a system in which the state apparatus is made necessary only by deficiencies that are likely to be gradually remedied. Roughly, the basic duty of the state is to see that contracts are lived up to and to protect honest people against mischievous men. Further, there is hope that, as a result of a better understanding of the laws of society, there will be, in the not too remote future, fewer disorders to correct and less need for the coercive power of the state. In its daring expressions, bourgeois liberalism is very close to anarchism.

In uncertain relation to bourgeois liberalism, which is mostly centered about economic life, a more popular trend of thought, rooted in the French Revolution, cherishes the notion that the dangers of tyranny inherent in the ancient structure of the state can be safely excluded by democracy. Elimination of government may come later; within the explorable portion of the future, what matters is that government should be in the hands of the people and work for the people. Here are the two patterns which exercised decisive influence upon the treatment of the state in nineteenth-century socialism: let the first be described as the theory of the withering-away of the state, the latter as the theory of the democratic transformation of the state.

The experiences of our century, inasmuch as they evidenced the connection between state socialism and totalitarianism, have made us receptive to the criticism of Proudhon, already cited in the second chapter of this book. Not a believer in the democratic transformation of the state, Proudhon shows that the proper way to contain the imperialistic dynamism of the state is to have it faced by a force possessed with equally uncompromising imperialistic ambition. This force is property. It alone can preserve society from exhaustion by the development of the state into totalitarian machinery. The last thought of Proudhon on the subject would be nicely expressed by the consideration that much should be forgiven to property on account of what it does for liberty. To put into the same hands the power of unconditional coercion which belongs to the state and the power of ultimate decision concerning earthly goods, which constitutes the right of property, is an arrangement fateful to freedom.{17}

The problem of alienation through unequal exchange admits of undemocratic solutions, in which mercantile exploitation is replaced by incomparably worse forms of servitude. Democratic complacency, in our time, identifies itself with the opinion that dictatorships and totalitarian practices can be avoided without the issue of alienation through unequal exchange being treated in any thorough fashion. Confusedly, many like to think that this is the kind of issue which ceases to be burning as soon as living standards are adequately raised. In several countries social politics is a dialogue between an antidemocratic party which proudly asserts a solution of its own and a democratic party which cherishes, without daring to voice it too loudly, the hope that the question will be dodged indefinitely. Yet alienation through unequal exchange is the thing that democracy, in the second phase of its revolutionary development, has to deal with, just as alienation through institutional bondage was the thing that democracy had to deal with in its first revolutionary phase.

Are there elements of a solution in actual democratic practice? Before attempting an answer to this question it is necessary to sum up the data of the problem.

We have understood that the market system is but a primitive method of approximating the just price. Even if controlled, in spite of verisimilitude, by unflinching honesty, the market system implies a continual allowance for profits. (By "profit" we mean any appropriation of wealth made possible by the market situation or by a relation between market situations over and above the recompense equal to the commodity sold or the service rendered.) Without trying to define a better method, we tried to show what better things a better method would do. It would treat the just price as a total made of (1) the cost of production and (2) a surplus for purposes of capitalization and free distribution. The part constituted by the cost of production corresponds to the interindividual aspect of exchange. The surplus is social by essence; its meaning is best expressed by contrast with the methods of state ownership: in a state-socialistic organization it is up to the central administration to save money for capital goods and to effect investments; it is up to the central administration to save money for free distribution and to effect the distribution. Private ownership embodies the principle of autonomy; it relieves the state of tasks that can be fulfilled by individuals, families, and associations, but it also assumes that private persons and private groups will actually perform duties which have to be performed anyway. For instance, subsidizing education on a broad scale is a thing which has to be done in any modern society. One way to get that thing done is for the state to collect through taxation all the money needed for the schools, plus a suitable percentage for the maintenance of the bureaucratic machinery and a few other forms of waste, and to distribute help to schools according to rules and whims which are those of the men in power. There is more autonomous life and there is less waste if money goes directly from private persons and groups to the schools. But when distribution is not effected by public powers, private persons and groups are intrusted with a social responsibility and cannot arbitrarily allocate to private pursuits the money needed for the schools.

With regard to the cost of production, the all-important item is human labor. Iniquity creeps in here. Should the conclusion arrived at by the market-place deliberation be my only rule, I would often undervalue my neighbor's labor to the point of making him destitute and overrate my own labor beyond all reasonable limit. (Such things happened commonly at the time when societies allowed themselves to be governed according to the dogmas of economic "science.") As an effect of the moral work carried out in the last three generations, it is now a common opinion that human labor is not an item of merchandise and that recompense for my neighbor's labor cannot be allowed to fall below the minimum needed for a decent life. This worthy step in the enlightenment of the common conscience still has to be supplemented by the realization that, on the other hand, the recompense for my own labor cannot be allowed to go up with no limit. There is somewhere an upper limit beyond which income no longer is a compensation for service but assumes the character of a one-way traffic of wealth. Just as we have come to outlaw destitution, which was still considered an inescapable phase of the economic cycle three generations ago, so a day will come when the conscience of the just will realize that the recompense of human labor, though admitting of inequalities, is comprised between a lower limit, which cannot be very low -- for it takes a terrific amount of money to prevent children from dying and to bring them up decently -- and an upper limit, which cannot be very high -- for no aspect of the common good demands that any person should enjoy an income many times greater than his avowable needs.{18}

Let us use as the background the picture of industrial societies during the golden age of laissez faire economy; against this picture it is easy to distinguish, in the democratic practice of modern societies, institutions and trends designed to promote equality in exchanges, to prevent wealth from leaking out of society, to procure greater accuracy in the estimation of human needs, and to assure the social use of everyone's surplus. The following examples should not be mistaken for the outline of a system; they are meant merely to suggest hopeful research.

1. The first place belongs to the labor union. Prior to the organization of working people, the labor contract was bound to be heavily unequal in the vast majority of cases. It would take a miracle of wisdom and disinterestedness for an equal contract to take place between two parties, one of which -- the employer -- can wait and cannot be replaced, whereas the other -- the isolated laborer -- can be replaced and cannot wait. But organized labor can wait and cannot be replaced. Its position is roughly equal to that of management. As an effect of this equality of position, genuine, i.e., equal, contracts can be negotiated between management and labor without any superhuman virtue being presupposed on either side. With due allowance for countless failures and abusive actions, what labor unions have done for a fair estimation of human needs is to be admired among the greatest accomplishments of mankind's social genius.

2. Co-operatives tend to establish strict equality between cost of production and sale price by returning profits to their members. It should be remarked that the co-operative movement, in its more recent phases, has often lacked the conquering energy which marked its early progress. Most communities are very far from having exhausted the possibilities of co-operation with regard to equality in exchanges. This failure may be due, in part, to habits of passivity generated by the state management of social problems.

3. Concerning free distribution, the great problem is to make it independent of the arbitrariness of individual whims without delivering it up to the arbitrariness of public powers and their bureaucracy. This twofold freedom is actually achieved, in a considerable measure, by numerous organizations which collect and distribute huge sums for relief, scientific research, art, education, and religion. True, the successful operation of autonomy, here and elsewhere, demands industry, labor, obstinacy, imagination, creativeness. An inquiry into the varieties of institutionally organized free distribution throughout the history of economic life might render great service by stimulating the imagination of planners. The worst thing about state management is that it makes people unimaginative; now, when people lack imagination, all that is left is state management.

4. It is hardly necessary to recall that in countless instances freedom from exploitation was served by diverse measures of state intervention. Such measures were eagerly promoted by those democracies which are historically inclined toward state socialism. In other democratic countries they were envisaged with extreme reluctance, then adopted and maintained under the pressure of obvious necessity (minimum salary, social security, subsidies to agriculture, etc.). It happens, not infrequently, that state intervention ought to be accepted in spite of its involving a curtailment of autonomy. But there are cases in which the intervention of the state serves to strengthen autonomic institutions and to increase social guaranties against all threats of imperialism, including those which may come from the democratic state. An example would be supplied by laws designed to protect the farmer's ownership of the land. If such laws are applied successfully, the resulting situation contains a new line of defense against the appetites of financial oligarchies and against those of public powers as well.


Our concluding remarks will be dedicated to the problem of classes. In conservative circles it is commonly held that the division of society into classes is natural and essential. A classless society is described, in these circles, as an equalitarian utopia, a mendacious picture calculated to produce a lust for the kind of equality that human relations do not admit of. Yet the division into classes, if words are used with any propriety, is a new situation, restricted to a short period of history. The first sentences of the Communist Manifesto contain a confused interpretation of the problem, together with much oversimplification: "The history of all hitherto existing society is the history of class struggles." Apart from the fact that history includes many events with but a loose relation or no relation at all to the class struggle, this sentence implies that society has always been divided into classes. Plainly, there has been some amount of class organization and class struggle in all times, but Marx and Engels mean more than this, as can be understood from the following sentence: "Freeman and slave, patrician and plebeian, lord and serf, guild master and journeyman, in a word, oppressor and oppressed. . . ." Marx and Engels are using here a loose notion of class, understanding by this term the orders of the old society as well as the classes of modern society. Confusion is increased by the wholesale condemnation aimed at whatever group holds the upper part in the struggle.

In order to clarify the concept of "class" let us consider the most definite case of class organization, viz., the industrial proletariat of modern Europe.{19} The legal condition of the proletarian, unlike that of most workingmen in earlier ages, is one of complete freedom. If he falls into some sort of legal bondage, as may result, for instance, from heavy debt, we understand that his is no longer the common proletarian condition but another condition, involving distinct problems and reminiscent of the slavery or serfdom of old ages. The connection between the proletarian and his employer is merely contractual and essentially dissoluble. When in a small enterprise we notice that the employer has a paternal feeling toward his employees and that the employees recognize and appreciate such a feeling, we are again confronted by a situation distinct, in varying degree, from the proletarian condition. So long as there is a relation of the paternal type between employer and worker or, more generally, between those who occupy the upper rank and their subordinates, struggles are not class struggles, no matter how violent they may be, and the division of society is not a division into classes.

A legal situation which deprives the employer of all paternal status brings about, between him and the employed, the relationship of contract partners. Later, this contractual relationship will be strengthened and stabilized by legal guaranties, in such a way as to give the partners the character of well-disciplined and really civilized members of a community; this institutionalization of labor relations marks the beginning of an effort to replace the proletarian condition by some condition deemed preferable and to overcome the division of society into classes. This division is sharpest when there obtain, between the groups divided from each other, a situation and a feeling of nonsolidarity. Anything that maintains or restores solidarity (for instance, membership in a guild or vocational community, common patriotism, common religion, attachment to a common way of life) lessens the sharpness of the division into classes and, correspondingly, the sharpness of the class struggle.

The contract of employment is made necessary, in a regime of legal liberty, by the separation between the laboring force and the ownership of the instruments of production. There is no question of such a contract when the laborer owns his part of land and the tools to till it, and there is no ground for such contract, either, when owner and laborer are connected by such a bond as slavery, serfdom, or a relationship of the father-to-son type.

A social class is a thing which does not possess full reality so long as it has not achieved consciousness. Moreover, the consciousness of being a member of a class does not produce the effects typical of the class structure unless membership is enduring and known to be such. Accordingly, the employment contract, even if we suppose a complete lack of solidarity between employer and employed, would not produce a class system if circumstances did not make for permanence on either side of the class division. On the side of the employer, permanence of status is guaranteed by ownership. On the side of the employed, permanence of status is caused by a rate of wages possibly equal and possibly inferior, but not much superior, to the requirements of daily life. The proletarian is a permanent and hereditary wage-earner. He is not necessarily poor; his living standard may be much higher than that of many people who were reputed well off in earlier times; but it is essential that his wages be low enough to make it impossible for him to escape from the wage-earner's condition through the acquisition of an estate.

The rigor of such an ideal-typical definition is necessary to evidence the peculiarities of the class structure. The division into classes, though not unknown to any society, does not seem to have been of dominant significance prior to the dissolution of the predemocratic society. The old orders -- clergy, nobility, Third Estate -- were not classes. Democracy put an end to the division of society into orders or at least reduced it to a factor of secondary importance, and it is democracy which released the forces that were to cause the division of society into classes and the class struggle. Ever since socialism has become fully class-conscious, the socialist movement has been divided into two currents: one holds that democracy, which proved able to overcome the inequalities of the order system, will also, through gradual or through abrupt change, overcome the inequalities of the class system; socialist current holds democracy incapable of putting an end to the class structure of society and to the kind of inequality connected with it. These two currents have in common the theory that a sine qua non of the classless society is the abolition of private property,so far, at least, as instruments of production are concerned.

It is perfectly obvious that the separation between the labor force and the ownership of the tools is such a necessary condition of the division of society into classes that, if private ownership is abolished, the class system, such as we know it, necessarily disappears and is replaced by another organization which may be better or worse. Prior to, say, the 1920's, the disposition describable as "socialistic optimism" could not be shaken by any experience, for mankind had no experience of what follows the suppression of the class system through the socialization of the instruments of production. In the course of the last generation the history of Russia has made it clear that a new regime ushered in by a very thorough abolition of private property could be an abyss of suffering and crime. Socialistic hope disappeared from a great part of the world. Its disappearance left a destructive vacuum.

Having realized that the abolition of the class system through the suppression of its sine qua non, private property, does not necessarily improve the destiny of mankind, we are disposed to envisage different lines of approach in the justified struggle toward a state of affairs in which normal inequalities, both natural and structural, would no longer be associated with the peculiar kind of inequality embodied in the class system. Private ownership is a necessary, but by no means a sufficient, condition of the division of society into classes. Progress toward the classless society can be accomplished through any measure designed to abolish or to weaken any of the several conditions of the class system. Paramount among these conditions are the isolation of the worker and the exploitation of the economically weak through unequal exchanges. The organization of labor and the promotion of equality in exchanges -- through a variety of methods which include, of course, changes in property relationships -- may not bring about, within the explorable portion of the future, the complete suppression of the class system; but they certainly may cause such a decline of its importance that it should no longer be an insuperable obstacle to the democracy of the common man. What is left of its inconveniences, then, may have to be tolerated as the inevitable counterpart of what property does for liberty.

It should be observed, moreover, that the evils of the class system are greatest when the class system is complicated with ill-adjusted remnants of an order system. Between class relations in Europe and in the United States dissimilarities are striking, though hard to define. Most of these dissimilarities are epitomized by the consideration that, unlike the American upper class, the European bourgeoisie, in many if not in all cases, is a successor to aristocracy. The European bourgeoisie, throughout the nineteenth century, was an aristocracy-aping upper class, with the same materialistic claim to excellent blood and hereditarily transmissible excellence as that of the old aristocracy. The struggle of the proletariat against the bourgeoisie was, in part, the continuation of the old struggle fought by the rising Third Estate against the nobility. What was described under the name of class struggle was a mixed sociological entity made partly of a struggle of classes and partly of a struggle of orders. Much bitterness was traceable to the conflict of orders which was going on together with the conflict of classes. A pure class conflict may be full of hatred, and conflicts of orders have always been known to arouse violent passions. But it seems that distinct bitterness attaches to a certain combination of the two. People do not always resent aristocratic dignity; under many circumstances they even prove exceedingly willing to believe in it and to draw comfort from the picture of the upper society as a sort of blessed island in this world of suffering and degradation. But the modern proletariat never understood and disliked increasingly, as time went on, the notion of the prerogatives of the nobility being assumed by the bourgeoisie. People are not unwilling to tolerate the traditional privileges of the nobility so long as they are, or are believed to be, associated with such distinctions as military bravery, education, skill in politics and diplomacy, refined manners, a life which is itself, if not a thing of virtue, at least a thing of beauty, kinship with spiritual leaders, and, above all, antiquity, the privilege of communication with the past, the privilege of overcoming the brevity of human life through continued communion with men of other times. An aristocracy is supposed to be that part of society in which man fulfils his wish of transcending time and brings down into temporal affairs a picture of eternal communion. One blunder of the bourgeoisie was their failure to understand that they were only a class, only a social stratum distinguished by the possession of enough wealth -- more exactly, of enough money -- to go to expensive schools, buy costly instruments, hire costly technical help, and wait for the maturation of slow economic processes.

{13} Democracy in America, Part II, Book IV, chap. vii (New York: P. F. Collier & Son, 1900), II, 339 ff.

{14} Thomas Aquinas Sum. theol. ii-ii. 61. 2.

{15} On the theory of the just price according to classical theologians see Albert Sandoz, "La Notion du juste prix," Revue thomiste, April-June, 1939.

{16} Thomas Aquinas Sum. theol. ii-ii. 77. 4.

{17} On this, see the essay of Georges Gurvitch, "Socialisme et propriété," Revue de métaphysique et de morale, Vol. XXXVII (1930).

{18} A great change has taken place, within the last century, in common notions concerning the ethical meaning of high profits and quickly made fortunes. Suppose that a writer composes a novel dedicated to humanitarian and, as it were, socialistic ideals, a novel designed to stir compassion for the poor, etc. It would not occur to him, in our time, that the hero of the novel should be a man who made a very big estate in a few years through the skilful exploitation of a device. Victor Hugo wrote such a novel, Les misérables, about a century ago. Toward the end of his life, Jean Valjean notices that his adopted daughter, Cosette, and her husband, Marius Pontmercy, have been led by false rumors to believe that the money given to Cosette as her dowry (a huge one for the time, 600,000 francs) has been acquired dishonestly. On his deathbed Jean Valjean, who is dying a saint's death according to the religion of Hugo (humanitarian deism), dismisses their scruples: I invented the substitution of rolled up snaps for welded snaps in bracelets; they are prettier, better, and not so dear. You can understand what money can be earned by it; so Cosette's fortune is really hers. . . . M. Pontmercy, have no fear, I conjure you. The 600.000 francs are really Cosette's. I shall have lost my life if you do not enjoy it! We succeeded very well in making glasswork. We rivalled what is called Berlin jewellry. Indeed the German black glass cannot be compared with it. A gross, which contains 1200 grains very well cut, costs only three francs. . . . I forgot to tell you that on buckles without tongues still more is made than on anything else. A gross, twelve dozen, costs 10 francs and sells for 60. That is really a good business. So you need not be astonished at the 600.000 francs, M. Pontmercy. It is honest money. You can be rich without concern. You must have a carriage, from time to time a box at the theaters, beautiful ball dresses, my Cosette, and then give good dinners to your friends; be very happy" (Les Misérables, trans. Lascelles Wrax [New York: W. Allison co., nd.], last chapter).

{19} The following description is, for the most part, taken from Goetz Briefs, The Proletariat: A Challenge to Western Civilitation, trans. Ruth A. Eckhart (New York and London: McGraw-Hill Book Co., 1937).

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