The Contribution of Economics to Social Work 9780231892780

Table of contents :
Contents
Introduction
I. The Rate of Economic Change
II. The Measurement of Economic Data
III. What Can a Community Afford?
IV. The Bargaining Power of Groups and Individuals
V. Economic Myths
VI. The Economist's Outlook
Bibliography
Index

Citation preview

T H E CONTRIBUTION OF ECONOMICS TO SOCIAL WORK BY

AMY

HEWES

T H E FORBES L E C T U R E S OF T H E NEW Y O R K SCHOOL OF SOCIAL W O R K

THE CONTRIBUTION OF ECONOMICS T O SOCIAL W O R K BY

AMY

HEWES

PROFESSOR

OF

ECONOMICS

M O U N T HOLVOKE COLLEGE

PUBLISHED FOR

THE

N E W Y O R K S C H O O L OF S O C I A L W O R K BY

COLUMBIA UNIVERSITY PRESS NEW YORK

1930

COPYRIGHT I 9 3 0 COLUMBIA UNIVERSITY PRESS PUBLISHED OCTOBER, I 9 3 0

Printed in the United States of America GEORGE GRADY PRESS

N E W YORK

CONTENTS INTRODUCTION B Y P O R T E R L E E I. II.

vii

T H E R A T E OF E C O N O M I C C H A N G E

W H A T CAN A C O M M U N I T Y AFFORD?

IV.

THE

BARGAINING

POWER

OF

INDIVIDUALS

VI.

.

.

.

T H E M E A S U R E M E N T O F E C O N O M I C DATA .

III.

V.

.

ECONOMIC M Y T H S T H E ECONOMIST'S O U T L O O K

.

GROUPS

.

I .

.

23 46

AND 64 86 106

BIBLIOGRAPHY

125

INDEX

131

INTRODUCTION The service of any profession depends upon the soundness of its foundations and the skill of its members in building a practice upon them. Social work, like most professions, developed a practice first and later became conscious that its foundations were neither clearly perceived nor conveniently formulated. Apparently these foundations lie in empirical human experience, in the social and biological sciences and in the application of both within the fields of medicine, education, politics, jurisprudence and religion. The subject matter of the social and biological sciences, philosophies of human welfare and the technology of other professions, have become increasingly available to social workers and others. Many scientific leaders have undertaken to suggest to social workers what parts of this wide range of subject matter should be recognized as the foundation of their profession. The problem, however, is not one of assimilating the relevant subject matter of science and the practical arts as it has been formulated by scientists and other practitioners for their purposes. It is rather of adapting this material to the distinctive requirements of social work. Social workers need to know something of sociology, psychology, economics, history, political science; and something of medicine, industry, law, education, politics and religious thought. This material is available ordinarily only in the form in which authorivii

viii

INTRODUCTION

ties in these respective fields have formulated it for their own purposes. To make it more readily available in the practical situations of social work presents a problem of selection first and, to some extent, also, of restatement. This task of adaptation is not one which the social worker alone can perform. It calls for contributions both from scientists and from leaders of thought who are sympathetically and intelligently aware of the distinctive requirements of social work, and from social workers who are adequately educated in the social and biological sciences and in the school of life. As yet the total contribution of either group to this selection and adaptation of fundamental subject matter has been small. The Forbes Lectureship, made possible through the generosity of a former student of the School, has been established by The New York School of Social Work as one means of calling attention to the importance of correlating the practice of social Workers with the findings of science, with religious trends and experience, with concepts of social philosophy and with the technical aspects of some other fields of professional activity. Through this lectureship will be presented each year over a limited period the relationship of one of the sciences or one other major field of human activity to social work. In this first volume Professor Amy Hewes has discussed some of the concepts of economics, an understanding of which clarifies both the problems and objectives of social work. Social workers will find in it material of direct value. They will also find in it a stimulus to broader study of economics for the light it throws upon

INTRODUCTION

ix

the problems with which they are constantly dealing and upon the practicability of many of their own objectives in the society in which they are working. PORTER R . L E E

I T H E RATE OF ECONOMIC CHANGE BORDERLINES

The strips between the separate fields of organized knowledge are the growing zones of those subjects. Discoveries of value crop up whenever one group of explorers ventures into the no man's land which separates its own undisputed territory from that which lies beyond the entrenchments of another group. A great deal of the most important work now being done in art, science and philosophy is the result of a kind of cross-fertilization of the ideas of investigators in different fields. Many books have recently been written to make the layman acquainted with what is going on in special fields. For example, "The Doctor," in the person of Joseph D. Collins, "looks at marriage and medicine," at "biography," at "literature," at "love and life," and at a great many other things. And the chemist looks at physics. Bio-physics, physiological chemistry and physical-chemistry, represent borderland fields in which work of great significance is being done. An instance is the use of cod-liver oil which has been exposed to ultra-violet light for the treatment of rickets. The chemist analyzed cod-liver oil and found that it contained a substance which he called cholesterol; the physicist measured accurately the wave lengths of light in the different parts of the spectrum. The 'physicalchemist showed the direct connection between the wave

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length of light and the activation of cod-liver oil in the cure of rickets. Recently a great American university announced a program requiring the spending of millions in the establishment of an Institute of Human Relations, where sociologists, biologists, psychologists and economists will come together to pool knowledge and technique, and to make progress which, according to President Angell, is not possible so long as sharp lines divide the various branches of science. Regarding the situation which gives the new Institute its excuse for being, he said: 1 I should say that perhaps the most pressing intellectual need is such poise as comes from a genuine coordination of the great sub-divisions of thought. These sub-divisions have become so highly specialized, so separatistic and so self-conscious, not to say self-complacent, that the genuinely philosophical outlook of l i f e and its problems, an outlook which pre-supposes inclusive vision and genuine insight, has become utterly impossible.

Perhaps the social worker has less need than most of us specialists to be warned of the separatism, the selfconsciousness, and the self-complacency which President Angell fears. Certainly the economist, who has discovered the present-day world to be very difficult of explanation by "laws" whose authority he once considered established, is in too humble a frame of mind to accuse another. Very few economists are now so bold as to guarantee that doctrines formulated by them can serve the needs of social workers. On the other hand, a number of them, of whom I am one, are full of enthusiasm for the exploration of the frontier country between the art or l

The New York Times, March 25, 1 9 2 9 .

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profession of social work and the studies which the economists are making of the human activities which, in one way or another, are related to earning a living. The present essay is made in the reasonable expectation that when the social worker and the economist look over their garden walls, they may challenge each other with new valuations and lay bare new techniques to their mutual advantage. M y task is to invite the social worker to look at the economic organization of society, to urge him to concern himself with the economist's attempts to explain how it came into being as it now lies before him, and to consider with him the desirability and the practical possibilities of making changes in the pattern. C H A N G E IN T H E P A T T E R N OF E C O N O M I C L I F E IS M A D E SLOWLY

I want to begin with some indication of the character and of the rate of change in the economic life of society. Some of you may remember words of Mrs. Eva Whiting White when she was discussing the importance of the student's relation to time, at a social workers' conference in Boston in 1925. "It is hard to face the fact that the grind of human progress is slow," she said, "that in our generation we can not do all we would." An essential for the student of geology is comprehension of the idea of geologic time. H e must get some understanding of the rate of change by which the earth has taken on its present contour, and also some grasp of the notion that, in spite of the permanent aspect its shape now has in our eyes, change never ceases. The trained geologist has the advantage over the beginner in that he

RATE OF ECONOMIC

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has this feeling of geologic time behind all his probings. It is constantly reminding him with what infinite slowness, as fitted into our schemes for measuring time, geologic change has taken place. Similarly, the economist, who is far from regarding the world as set in its final mold, is aware that many things are hard to change, that they can be hurried only very little by even the most zealous of reformers or revolutionaries, however deep may be their faith in such battle-cries as "Socialism in our time." Nevertheless, change is as inevitable in the economic structure as the effect of running water which gradually cuts a way through granite, though it may take relatively the same amount of time. The reformer needs information concerning the persistent economic trends. H e must distinguish between the features in our arrangements which resist change in different degree, in order to carry out his programs with conservation of energy. O L D INDUSTRIES AND O L D

TOWNS

The attention of the social engineer of today, as he surveys western industrial development, is sure to be caught by harmful social effects which cluster about certain old industries, industries which had their youth when materials and'markets offered them better opportunities. The inertia of a senile industry is very great. It resists a new pattern in much the same way that an old town resists it and for similar reasons. The old industry and the old town have institutionalized their modes of life; their interests are vested in the old. These must be protected by the rejection of all that imperils the established way.

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5

On the other hand, the new industry and the frontier settlement have not yet established any securities and they welcome rather than defy the innovator in the hope of discovering ways to the gains which, once obtained, will be themselves protected by a new crust of custom. The recent industrial history of England furnishes examples of these contrasts. England today is struggling with the problem of extensive and prolonged unemployment. This problem is associated with industries nearing the end of their life cycle, a circumstance which has escaped the attention of many whippersnapper reformers in the House of Commons whose speeches suggest no cure for industrial decrepitude. Yet the difference between the old and the young is conspicuous enough. On the one hand stands the venerable Lancashire cotton textile industry, antedating the industrial revolution itself, whose present plight threatens to depopulate the Midlands; on the other its lusty grandchild, the rayon industry, an infant in years, but with profits mounting to match the other's losses. It would be rash to say that the cotton textile industry may not yet be rejuvenated, but an important turning point has now been reached in a development which was almost uninterrupted except for the days of the American Civil War. Favored by natural advantages of climate, water, iron, coal, and nearby harbor facilities, Lancashire spinners and weavers made cotton for the world and developed "spiritual arrogance." When asked in 1909 by an important Chinese mercantile house to alter the count of a certain line of cloth, the head of a Lancashire concern replied, "Tell Messrs. Chink that we've made that cloth

6

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CHANGE

for thirty years exactly as we make it now. It wouldn't suit our spinning to alter it and we're not going to alter it. If they don't like it they can lump it, and you tell them so flat." When the "spell of bad trade" set in after the war boom and goods filled the empty warehouses, and Lancashire began to feel the full force of the foreign competition from the newly developed factories in the Far East and South America, Lancashire industrialists were unable to make the necessary radical changes which were prescribed for the sick industry. John Maynard Keynes advised "rationalization." It was clear that new methods were needed to cut the heavy costs but the industry remained deaf to advice and lost precious time by persisting in older remedies, such as running on short time and various minimum price schemes. It is only just now, after three years of agitation, that at last a few firms, under the segis of the Bank of England, have been persuaded to join forces to form the Lancashire Cotton Corporation. Meanwhile, the young rayon industry, organized after the most modern and approved fashion, has forged ahead. Branch companies have been set up in the important consuming markets of the world. An international working agreement between Courtaulds, the largest British producer, and the large German and Italian producers has been concluded and Courtaulds has recently declared a ioo percent stock dividend. In one case, an ancient and honorable industry with its back to the wall has unwillingly accepted the new methods of management in much the same spirit as the old handicraftsmen yielded to the machine in the face of starvation, while the

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CHANGE

7

infant industry sets a new behavior pattern for the conquest of the markets of the world. We often talk of "the interests," referring to the conscious aggressive policy of the big combinations, diverting profits to themselves at whatever cost to the small competitor or to public welfare. Indeed the bogy of "big interests" so absorbs our attention that we fail to see how much progress is thwarted by the ramified control of interests that are merely old. We have "vested interests" in many badly functioning businesses which cannot be disturbed without scrapping the incomes of widows and children. From an engineering point of view, many old factories and processes should be done away with, but to give them up and to install new methods which would save waste, would mean an initial loss to the owners of private capital which is tied up in the old. The loss or reduction in their immediate income in many such cases is borne by too few people under a system of private ownership, and consequently they reject the new. Change can only be made slowly, because the institution of private property protects the present order, yet this institution itself like the price system, machine technique, and other economic institutions which determine our life today, is of comparatively recent origin. T H E T O U G H N E S S OF T H E F I B E R OF E C O N O M I C L I F E

A quality of economic life which contributes to its change-resisting capacity is found in the toughness of the fiber of which it is woven. The primary and fundamental human needs command human energy from start to finish, and this energy is exhibited not only by the indi-

8

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CHANGE

vidual but by groups so that, when organized economic life has once rooted itself in the habits of any people, it is surprisingly difficult to destroy. It springs up again after it has been to all intents and purposes annihilated. For example, it is only necessary to recall the return of the French peasants to the devastated areas after the Armistice. Almost at once they set in motion again the routine of agricultural life after the very soil had been taken away. An equally striking instance is the miracle of Germany's recovery. The accomplishments between 19x8 and 1928 are without parallel in any other decade. The former year saw the stocks of the country's raw materials exhausted, the shelves which had held her reserve goods empty. She was compelled to supply her needs by importing from other countries to which she could send very little in exchange so that her "adverse balance of trade" reached twelve billion marks. Today, although the balance of trade is still adverse, distinctly favorable signs are to be found in the increase in the total for foreign trade and the increase in the amount of manufactured goods exported. In 1918 her ships were taken from herj today her tonnage is rapidly increasing and she stands second to Great Britain in ship construction. At the end of the War, she counted more than a million lost in battle. At present she sends annually six hundred thousand into industry, instead of into the army. In 1918 and in the years following, she suffered the results of a badly inflated currency and a state debt of twenty-five billion dollars, or five hundred dollars per head. Today she has a stabilized currency and a balanced budget. Perhaps the surest sign of all is the change in available capital.

RATE

OF ECONOMIC

CHANGE

In 1 9 1 8 no fresh capital had accumulated. Recovery was impossible without it. B y 1 9 2 8 capital was flowing in from abroad and savings had reached one-third of their pre-war level. In short, the will to live took possession of her damaged economic apparatus and set in motion old habits of industry long disused. A similar story can be told of Hungary after the W a r —the story of an unbalanced budget, inflated currency and an adverse balance of trade. A f t e r a brief two years the budget was balanced, the currency stabilized and M r . Jeremiah Smith, the fairy god-father of the story, had come home to sit before his desk in his office in Federal Street in Boston. T H E ADDITIONS OF F R E S H C A P I T A L

Perhaps one of the most important indices of the rate of change in a given community is the accumulation of capital. It may often serve as a measure of industrial health, and condition the development of the whole structure. Y e t it is very hard to say just how much more capital a country has one year than another. M r . David Friday, who has subjected to exhaustive analysis the postwar savings made in the United States, is unable to satisfy some of his critics as to all his figures j yet nobody has really quarreled with his conclusion that our savings have now brought us to the point where "no nation or group of nations can seriously threaten our economic supremacy. W e are within striking distance of an economic order where the means of well-being shall be established for all." So much for the staggering totals and for what they

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might make possible. Much depends on actual distribution and on just where saving is made. According to Mr. Friday's analysis the percentages put back into business present striking differences. In agriculture and in businesses carried on by individuals and by partnerships, the owners depend on savings which are returned at once to the business, whereas the corporations distribute a much larger part of their earnings in the form of interest and dividends. In 1 9 2 1 , the corporate surplus reinvested was only 6 percent of the total savings of the country as a whole. The savings in 1922 amounted to about one-sixth of production, that is, out of a national income of over $66,700,000,000 there was a capital accumulation of over $10,000,000,000. The rate of accumulation of new capital and their capacity to establish credit reserves, is the measure of success in the struggle toward recovery of the war-stricken countries. Russia, baffled in her effort to borrow, has faced the question of the possibility of waiting until she could accumulate capital herself, but she knows that the latter alternative will mean the collapse of vital parts of her program, that her chance to hold her own in spite of her incomparable natural resources will largely depend upon getting credit from those countries with accumulated capital. R A T E S AND R E L A T I V I T Y

The rate of change in one part of the economic structure as compared with that in another is the important information for social engineering. Mr. Ogburn's "cultural lag" points to the problems which emerge because some change is sluggish and some rapid. And here it

RATE

OF ECONOMIC

CHANGE

il

must be confessed that we can do little but point out the fact of difference. Although the economist may urge upon the social worker the development of a time sense appropriate to a possible rate of change, he does not possess such definite methods as the geologist has worked out. The geologist knows the factors which cause change in the earth: weathering, running water, and the local instabilities in the earth's crust. From a study of these factors and from latitude and longitude readings from year to year, such as are now being made at Government stations, the science of predicting earthquakes is beginning. Similarly, the biologist knows some of the factors which have determined the form of animal structure. The geologist (the paleontologist) has taught him how to regard the influence of environment in structure. The experimental geneticist has learned some of the factors of heredity. That is, he can formulate some hypothesis concerning biologic change, evolution. But the economist is only beginning to measure change. Perhaps the best he can do is to give some assistance in the matter of relative rates of change. H e has few dependable records which are old. H e is just beginning to set up his observation stations. In spite of this, social technology cannot afford to do without the few returns he can show to date. The economist in his turn should welcome from the social worker, for checking his calculations and making them more definite and accurate, all the data available. T H E R E A D I N G OF E C O N O M I C H I S T O R Y

An excellent way in which to achieve an understanding of the character and rate of the change in the economic

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life of a community, is to take an active part in it and to live to be one hundred years old. The second half or at least the last quarter of such a life, in the case of a reflective person, is likely to yield rich results. For those whose expectation of life does not permit anticipation of more than three score years and ten, there are other ways. I want to suggest to you the pleasure and profit of reading economic history in some of the forms in which it has been presented in recent years. In a flash of genuine inspiration, Miss Eileen Power, a brilliant young English historian, has resorted to what she calls the personal treatment of history. In her little book entitled Mediaeval People she has reconstructed the lives of half a dozen persons, every one of whom actually lived upon the earth, but not one of whom is known to fame, with the exception of Marco Polo. She has created these people from bona fide records, from the estate book of a manorial lord, from a bishop's register, from treatises on household management, from letters and from wills. For instance, she makes a place in our list of acquaintances for the peasant Bodo, who lived toward the end of Charlemagne's reign on the little estate of an abbey, not far from Paris. We follow him through his day and know almost as much about him and his work as we could find out about that of a small holder in France today. And so with a merchant of the staple in the fifteenth century, with Madam Eglentyne, Chaucer's Prioress in real life, and so also with a French housewife in the fourteenth century. And because it is not general and vague, but concrete and personal, you will, during the few hours it will take you to read the book for the first

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time, get a sense of the sweep of time that has carried away an order so authentic that you must necessarily contrast it with our own and learn much in so doing. There is a similar, but more imaginative, study of the life of a different economic order in a book by William Stearns Davis which he calls Life on a Mediaeval Barony. Here the past takes a zest and tang which seldom breathes from more conventional histories. You accept the fact of real people who wept and sang and struggled to make a living before we inherited the earth, and as they come to life on the printed page they give us new insight into the tangles of today. ECONOMIC HISTORY IN NOVELS

It has seemed to me a profitable and delightful plan to keep going all the time, with whatever other reading must be done, some novel which can set the reader free from his preoccupations with the particular economic order in which his lot may be cast. There are few better ways of keeping us reminded of just how the economic order is a mold for the social life and determines the particular form in which our problems come, problems which we are prone to attribute to the greed or cupidity of particular individuals. Take, for example, Thomas Mann's Buddenbrooks. Try reading it as the only source available for reconstructing the economic background which supported the German culture of the middle nineteenth century, and then turn to the changes on this side of the great gulf made by the War. A stupendous work, and one that might keep the reader occupied for a good space of time, is a study of the social and economic organization of

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mediaeval Norway as it is found in the novels of Sigrid Undset, now appearing in English, The Master of Hestvigen and Kristin Lavransdatter. A list of novels long enough to last for several years could quickly be made. Many English classics, worth re-reading for this purpose alone, might be included, as for instance Arnold Bennett's Clayhanger, which shows the impress of the pottery industry upon a whole countryside. One would expect to find in such a list the names of Thackeray, Dickens, George Eliot, and Galsworthy, not to mention the Americans who come readily to mind. THE

E C O N O M I C H I S T O R Y OF T H E

IMMEDIATE

COMMUNITY

Although the study of changes made across the sweep of centuries, and changes which have taken place in the novel settings of a foreign country, are valuable for the purpose we have been discussing because their novelty and strangeness are stimulating to the imagination, it is nevertheless true that the social and economic history which has most immediate bearing for the social worker is that of the community in which he practises. The appearance this year of Mr. and Mrs. R. S. Lynd's Middletown, furnishes the best example we have had of a detailed picture of the social and economic life of a community. Such a study, with actual names substituted, is the kind of map which the social worker should have at hand to guide him in all his community planning. In this history of a community's industries, the economic, racial, and cultural background of its different social

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classes, its changing land values, its transportation systems, its dependence upon the surrounding country—in these things are to be found the factors determining the character and the rate of change. Here are the terms in which the social worker will find the problems which are of concern to him. Without them he is really as unequipped to understand his problems as a botanist would be to understand plant life if he knew little or nothing of the regional conditions. Indeed, the contributions of economic history to social work are so many and so clear that it seems reasonable to hope we can soon look forward to the time when serious work in this branch of economics will be made a requirement of preliminary training for professional social work, just as courses in chemistry and zoology are now specified as pre-medical preparation. M E T H O D S OF SOCIAL W O R K G R O W O U T OF E C O N O M I C ORGANIZATION

But there is another angle from which economic history should be of interest to the social worker. Only by looking back can he become aware of how much of the outlook and technique of his own profession is determined by economic organization and parallel political philosophy. There has been some recognition of this in recent studies of the development of social work. Mr. Robert Kelso, in his History of Public Poor Relief in Massachusetts, makes it clear that the harsh measures of the early days were directly derived from the meagerness of the economic resources of the community. If you are not

16

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made dizzy by Mr. Queen's method of tracing the record backward, instead of in the usual chronological order, his book, Social Work in the Light of History, will afford some excellent illustrations, but his emphasis is more upon the industrial developments as causes of social problems, than as factors in determining the technique of dealing with those problems. Social work itself has taken form and shape from the structure of economic organization. A review of the succeeding forms of organization should make this evident. The earlier and simpler social systems presented no need for specialized social work. So long as the population was grouped in small, independent communities, such as those of the household system of feudal Europe, the early southern plantations in the United States and the western frontier farm as we have known it in American history, the social worker did not make his appearance. Such communities would not and usually could not support him. The lord of the manor afforded whatever protection or relief the people had, exercising functions which were developed by his successor, the country squire, as he is presented to us in his last incarnation by Mr. Archibald Marshall. N o SOCIAL W O R K E R S B E F O R E T H E

INDUSTRIAL

REVOLUTION

The handicraft systems which spread over Europe for three centuries likewise presented no opportunity for professional social work. The merchant and craft guilds performed services for their members, adding social to their economic functions, just as the ecclesiastic organ-

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izations added them to their primary religious functions. The guilds had revenues devoted to "the maintaining of decayed members of the gild, the education of their children, the portioning of their daughters, the giving of pittances to their widows." They have been described as having the "characteristics of a benefit society providing against sickness and death amongst those belonging to them." It was not until the wastes of the industrial revolution brought unemployment, overwork, and starvation, to the masses of people whose method of work and manner of life was so suddenly changed, that the adjustment of their difficulties became a major undertaking. The social worker in the guise of the benefactor and philanthropist then appeared with this for his job. Mr. Queen relates his appearance and the whole humanitarian or betterment movement to an important feature of the industrial revolution, the rise of the middle class to economic power and social prominence. With the winning of political ascendency, the middle class took over responsibility for the affairs of the community and organized social work. Mr. Queen calls them "uplifters" because although "they were willing out of the abundance of their own wealth to make gifts to their less fortunate fellows, they were not willing to yield any part of the control to those who wished to help themselves." Oftentimes with a genuine desire to help there was combined a desire to "keep the workers contented" and also a wish to win social distinction through benevolence. Several great names belong to this period, including of course, Robert Owen, M. T. Sadler, and the Earl

18

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of Shaftesbury, all of whom knew at first hand the misery brought about by the factory system and were tireless in their efforts to get Parliament to pass protective legislation. T H E R O L E OF T H E

PHILANTHROPIST

T h e clientèle of all these early social workers were men and women and children who did not think of themselves as members of an oppressed class. Many of them regarded their individual suffering as a dispensation of Providence. But their very numbers and their concentration in towns soon made for a sense of solidarity. In 1824 Owen organized the Grand National Consolidated Trades Union, and though this leviathan, born before its time, was doomed to collapse, it was nevertheless an omen that the day of the philanthropist was to be succeeded by one in which the oppressed workers would direct their own emancipation. T H E SOCIAL W O R K E R AN E X P E R T

Under the growing factory system, the workers began to call for the advice of the expert rather than the help of the philanthropist. And so emerged the social worker in his more modern role. Sidney and Beatrice Webb are foremost examples of the new type. With monumental industry and skill they have labored for more than a generation, not only toiling themselves, but stimulating others to set up organizations for research. They have probed into the country's experience and patterned anew poor relief, prisons, trade unions, cooperatives, municipal

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trading, and have finally formulated and presented a complete constitution for the Socialist Commonwealth of Great Britain. T H E S H I F T IN S O C I A L CLASSES B R I N G S N E W

IDEAS

AND A N E W P E R S O N N E L T O S O C I A L W O R K

The shift in social classes which was the result of postwar industrial and political factors in Germany, had the effect of changing the role of the work of the private agencies and the personnel of their workers. Dr. Alice Solomon, the Director of the Berlin School of Social Work, writing in 1920, described some of the problems which the profession had to face at that time. In the first place she tells us that it was questioned whether there was any sphere for private social agencies in a socialistic republic. The socialist leaders at first demanded that all welfare work should be "socialized" or "municipalized." "From the people, for the people, not 'From the upper classes for the lower.' " It was finally decided that the private institutions remained necessary, and a scheme for cooperation and support from public authorities was worked out. Another idea in the new German republic was that "social workers should be taken from the ranks of the class or of the section of the people for whom the work is intended." In order to make training possible for working women, the government helped in an attempt to provide this in a special class for working girls at the Berlin School for Social Work. Before that time such schools had been open only to the girls with higher education.

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The loss of old volunteers was a serious one. Dr. Solomon describes the shift as follows: 1 . . . in wide circles o f the m i d d l e and upper classes . . . the possibility of going on with such work is rapidly disappearing. T h o s e who have lived on a moderate income . . . are actually compelled to earn a living. . . . Others, the great mass of married women o f the middle class, who could formerly give part o f their day to volunteer work, are no longer in a position to keep servants. . . . T h e gaps among the former workers must therefore be filled with new adherents. It ia the great moral task of the new G e r m a n y — a n d this educational work falls first upon the leaders o f social work—to develop in the new rich class, in war-profiteers and similar people, a sense of responsibility f o r the community, to win them over to devote not merely their money but themselves to a higher f o r m of life. And it will fall equally upon the leaders o f social work, more as a privilege than as a duty, to win f e l l o w workers f r o m the newly rising classes, f r o m the laboring class, f r o m professional workers and employees; to make them help in the attempts to ameliorate the f a t e of those of their own class who, in the general rise of this class, for one or another reason, must be left behind. T H E S O C I A L W O R K E R AND T H E N E W

INDUSTRIAL

REVOLUTION

If the industrial revolution did indeed bring into existence the first social worker, his fate is still bound up with its destiny, he and his tasks are now being still further shaped by it. For the great aggregation of factors which work together to still further modify our methods of production are now bringing the industrial revolution to a new phase or, perhaps more accurately, a new revolution with a new technique which has given us mass pro'"Social Service in Germany T o - d a y , " by Alice Solomon. 1 9 2 0 ) , Vol. 44, p. 664.

The Survey (Sept. I ,

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duction. Mr. Stuart Chase tells us that we live in the age of a billion horse-power of mechanical energy, energy which has increased twice as fast as the population in the United States since 1870. The robust young industries of the last of the eighteenth century, not many of which have been able to adopt the new technique, have now grown old. The owners of cotton mills which were once the pride of England sadly watch the collapse of markets and vainly seek for new ways to regain profits once enjoyed. Throughout the severity of this last winter, idle miners not only suffered from cold and hunger but from the depressing certainty that thousands of those out of work would never go back into the mines. England, the country which saw the birth of the industrial revolution, has lost her industrial supremacy and no Royal Commissions or "colonial preference" or "safeguarding" have brought it back. The old-time clientèle of the social workers, the great mass of wage earners, have in the meantime learned to look further ahead than was their wont, they have achieved industrial organization in trade unions, and they have held the reins of government in their hands. Today they have little use for, or faith in, the various ameliorative schemes which were formerly the stock in trade of the social worker. Now and again some of them turn to him and say: " D o you share our contention that we must have fundamental industrial reorganization to release us from the ills we now suffer? " And at that point the social worker may wonder how far he is able to go in making a genuine social diagnosis. If he is serious and thoughtful, he will understand that to do so he must become a deeper student of the

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economic order than he has been before, that he must face profound changes in the technique of his own profession, perhaps even that he must make new political allies in order to get his work done.

II T H E MEASUREMENT OF ECONOMIC DATA T H E ROLE OF MAGIC

Black magic is abroad in the land and all Christian people should be warned against the danger lurking in it. It is practised not only upon the innocent and unsophisticated, but also upon those made sober by long experience. When important decisions are to be made, the old chiefs now trust no more to their own convictions regarding the matter. They heed not their own "hunches" nor their reasoning. Instead, they summon the shaman before one step is taken. And the statistician comes with his ritual of signs and symbols, makes a few passes which are thoroughly understood only by himself, and says the final word. I remember seeing, during war days in Washington, ordnance officers and quartermaster-generals made humble before some stripling less than half their age and only just fresh from a university. H e would tell them how many guns they could have, how many high-power shells for their serious business, or how many barrels of pork their soldiers must eat in order to make victory certain. And, more than once, I have seen a group of otherwise intelligent people, too abashed to admit their ignorance, with bewilderment on their faces, finally give their assent with no real comprehension of why they did it. But they might easily have had it all translated to

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them, or better, they might have learned the new language with very little trouble. They would then have had real light for the analysis of their problems instead of the discomfort of surrender to an authority they sometimes suspected of being a mountebank. T H E R O L E OF STATISTICS

The social sciences use two great methods of research. The first may be called historical. In using it to interpret a social situation we push back to origins and trace the development. For instance we go back to the earliest and simplest kind of exchange in an effort to understand value. The development of local and national markets is traced, the first uses of money, the invention of credit instruments. We gave some attention to this kind of method in the first lecture. But in no part of our experience do we see any individual unit in isolation. One man's income is compared with those of his fellows; one item of expenditure in that income is large or small as compared with the whole. We have to group and classify in order to accumulate meaning. In so doing we resort to the second method of research, the analytical or statistical method. It might appear that this second method is of greater importance to the economist than it is to the social worker, that the interest of the former tends to center in mass movements while that of the latter is fixed in the individual human being. Especially since the social worker has come to appreciate personality factors, his preoccupation in a single case has seemed to indicate a technique that did not depend on the use of statistics. Such,

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however, is not the case. The social worker can no more dispense with a statistical method than a banker can. T o do so he would have to give up all hope of continuity in his work, all chance of discovering causes or of putting constructive programs into effect. M E A S U R E M E N T AND SCIENTIFIC PROGRESS

It has been claimed that each step which marks the advance of science is merely the discovery of a technique for making more and more accurate measurements, either measurement of what is infinitesimally small, as in chemistry, or measurement of the magnitudes of time and space which run beyond all imagining, as in astronomy. The sphere of common interest between the social worker and the economist is in the chance to develop and compare technique for measuring social and economic data. The greater part of these data is of common concern. Both professions study the behavior of men as they strive for the materials to make possible a fuller living and both professions are eager to locate and eliminate the wastes of our industrialism which result in the domination of the struggle for bread and butter over all other activities. SOCIAL W O R K E R AND ECONOMIST M U S T BE STATISTICALLY M I N D E D

Now there should be no longer any resort to magic. No economist and no social worker should allow himself to depend on the outsider to determine how his measuring is to be done. Unless he is fortunate enough to be born into the world with elementary statistical common sense

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(only a few do come so equipped) he should set to and acquire it. If he does not do this, he will go clean off the track and be found shrieking "Figures lie!" or some other such absurdity} or, what is almost as bad, he will be in the clutches of an outside person in whose hands the statistical tool will go foul because he has not studied the material he tries to manipulate, because he does not even recognize its units, so that his apparent precision is applied to a false analysis. MINIMUM

EQUIPMENT

NEEDED

Granted that some facility for using statistical methods must belong to anyone who launches upon the attempt to interpret social and economic data, what is the minimum equipment required? It is really not extensive baggage that is needed and I believe that it can be acquired with good will and persistent application by ninety-five persons out of every hundred. I am not sure what should be done with the remaining five percent. Perhaps, if they could be persuaded to devote their time to metaphysics or some form of very pure art, the social sciences might profit by the arrangement. S I M P L I C I T Y OF STATISTICAL M E T H O D

Like most important things, statistical procedure is really very simple. Consider what it actually is. All the time you are employing it you are merely trying to answer two or three type questions. For instance, you may be asking:

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T H E STATISTICAL QUESTIONS

( 1 ) What is the relation of this part to its whole ? This is what you are doing when you are trying to find out how much of his income a man must spend for food. Or you may be asking: ( a ) What is the trend or central tendency in all these changing units? This is what you are doing when you ask: Are wages increasing and how fast and how much? It is what you are doing when you ask whether it costs as much to fill the market basket of the family of today as it did to fill the market baskets of families of the same size and shape last year and the year before that and so on to the year before the War. In the third place you may be asking: ( 3 ) What effect, if any, has this changing unit upon that one (or upon a group of units)? And that is what you do when you try to find out whether, if men work for a shorter day their product will be more or lessj or when you find out the number of centimeters added to the average stature of seven-year old children in the case of families living in one-, two-, three-, four-, or fiveroom apartments. Whenever you are using the statistical method, you have in mind a question in form like one of these. It is most important to formulate such a question very clearly and to keep it persistently in mind. One of the commonest faults is to be wandering about without a clear-cut question. Such questions are the necessary first steps towards arranging material in significant tabular form, a practice which should become almost "second nature." Most of

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the trouble comes, not in wielding long mathematical formula: in Greek letters, which are fairly easily managed, and with the exception of a very few, not of primary importance, but in such kindergarten obligations as remembering what you are counting. You might think it safe to assume that no intelligent person would take the time and trouble to count unless he knew what he was counting. The inexperienced person often does just that, when he has had no statistical training. In the meantime the system of notation is in no way at fault. His unit has escaped the enumerator. I have seen tables in print from which it was impossible to tell what was being counted and classified. AVERAGES

The first requirement then, after your question has been formulated, is to define the unit. What is "a family," "an income," "a community"? After you have collected the data with which to answer your question it becomes necessary to find a summary expression for the groups studied. Usually the choice is between three, the arithmetic average, the median, and the mode. There are a few others, but they are not important. This choice, however, is highly important in the case of units that are differently distributed. You must know which single average or combination of averages best describes the selected series. INDEX N U M B E R S

The economist and the social worker today must be ready to measure and compare changes in the conditions

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of living. For instance, the social worker, in order to make his plans and determine his policy must be constantly informed about changes in wages and prices. For this he will be seriously handicapped if he can not make index numbers, or at least if he can not find and use correctly the index numbers somebody else has made. This is another point where a very careful choice is involved. CORRELATION

To get some hint of the causes of the changes going on all about, he must understand what correlation is, he must study the degree of association of variables one with another. It is about the only hope we have of learning cause and effect relations in human affairs. Perhaps the Pearsonian coefficient of correlation is one of the formulae the social worker should adopt. One reason for urging statistical training is because everyone who deals with social and economic data is inevitably forced to resort to statistical procedure. Therefore, since resort to it is unescapable, it is important to learn the rules of the game, for here as perhaps nowhere else, if you only partially know them, you are bound to come to absurdity if not to serious trouble. T H E D A T A TO B E M E A S U R E D

Let us consider what has been shown by measuring some of the data which have common interest for the economist and the social worker. They are all familiar things. Recent social work aimed at maintaining standard living conditions has been based on a standard budget

3o

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and a standard wage, looking to the time when all the breadwinners could earn enough to support a family in health and comfort. If "standard" wages and "standard" budgets are to have any relation to actual experience and to be derived from its study, they can be compiled only by extended and continuous statistical procedure. S I Z E OF F A M I L Y

For a long period of time much of the investigation and actual relief have been carried on under the assumption that Heaven so smiled upon a family in which there were a man, his wife and three children that we should plan our work in the world with a family of that size and shape in mind. It is less than five years ago that Paul Douglas took his courage in hand and went forth to count the children in actual families, with the result that the family of five has now been left very little room on the map. The findings which appeared in the quarterly publications of the American Statistical Association, for September 1924, were reprinted in the book entitled Wages and the Family, and are well known. H e found that in Great Britain, according to records already in existence, only 13 percent of a large group of families studied had three children, while nearly a third of the families had no children at all. A fifth had only one child. In France, the family of five was characteristic of only six percent of the families, and in Belgium of only five percent. According to the count made in the cases of 11,156 "normal" families by the United States Bureau of Labor in this country, the fam-

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ilies with three children were less than a fifth of the whole number. Of course there are, and have been, a great many families with more than three children and a good deal of confusion on the point of the composition of the actual family has come from the wrong use of the arithmetical average which introduced large numbers of families of five who had never lived upon the earth. Douglas points out one aspect of this, which was the actual case with English and Welsh families where the small number of families reported on who had more than three children, had in their membership more than a third of all the children. I f , for instance, wages were to be determined according to the needs of a family of five, the needs of these larger families would not be met, while the much larger number of families with less than three children would have incomes more than sufficient to meet their needs. But the total income of the country might not be sufficient to pay a wage bill large enough for these hypothetical children. This was found to be the case by the Australian Basic Wage Commission and a big and important program for social legislation was nearly wrecked by the false assumptions based on calculations not statistically correct. MINIMUM WAGE

The barrier of unconstitutionality, which has virtually called a halt to the progress of the movement to establish legal minimum wages in this country, was not set up before we had learned a good deal from the classifying of wages which the legislation made necessary.

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It is a striking thing that not even the individual most immediately concerned, the man or woman who has earned a wage, knows very much about it. I can recall such instances from our experience in the gathering of wage material for the first minimum wage boards in Massachusetts. Not only once, but a large number of times, we met workers with convictions about their own earnings which were contrary to the facts. It was then the practice of the agents of the Commission to transcribe the complete record of fifty-two weeks' pay from the pay roll and figure the average weekly earning; but the worker, whose record it was, might report to the wage board that she had earned a good deal more. She actually had the capacity to forget what must have been often the tragically unpleasant things in her experience, the long periods when earnings were very low and even many of the weeks when she had no work at all. In cases where earnings varied a good deal in size from week to week, it was usually the impression of the worker that the largest amounts she had received were the most frequent ones, when such was not at all the case. Wage boards learn a great deal about the differences between rates and earnings, about charges subtracted, fines, and bonuses, piece and time rates. They learn a great deal about "real wages," which is, indeed, their main job. It was very clear to those watching the work of those first conferences between workers' and employers' representatives, during which they grew to understand each other as they clumsily computed averages and checked figures, that actual measurement is a much better

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basis for negotiation than any collection of impression and opinion can possibly be. T H E M O V E M E N T OF R E A L W A G E S

There are few things more fundamental in a diagnosis of the economic health of the country than the movement of real wages. We have had scanty and (independable information about the relative purchasing power of the workers, and data which are reliable are just now beginning to accumulate. The work of Paul Douglas in this field is highly important. His book on Real Wages in the United States, published in 1930, is concerned with the movement of real wages in this country since 1890. His statistical work has been undertaken to determine the relative purchasing power of the worker, which he has found by dividing the various indices of money earnings by the index of the cost of living. This has been done for the main groups of wage-earners in the manufacturing industries, for government employees, clerical and professional workers. The results have called forth much discussion and are highly significant. Since 1914, and especially since 1919, the great body of employed wage-earners have received increases which permit them to purchase from one-fourth to one-fifth more goods than they could in 1890. They continued to be able to do this through the depressions between 1920 and 1923. Some groups, however, have not attained this improved purchasing power—notably the clerks, who have probably sustained an actual loss in their income.

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The analysis includes an examination of causes of improved purchasing power with emphasis upon increased productivity of the worker, the rate of which Douglas thinks has passed its peak. The ability of the mass of industrial workers to maintain their improved position in the future is doubted, because of the probability of increased prices of agricultural products, the low cost of which has been of advantage to city workers and one of the causes of the point reached by real wages. I N C O M E IN T H E U N I T E D S T A T E S

It is sometimes assumed that the problem of sufficient income is the problem of equitable division j that in the United States at least, where the national income is so large, there is enough for all, but that some are kept in want while others have a plethora. Before 1921 we had very poor information as to what the national income actually was. Estimates about it were in disagreement. The National Bureau of Economic Research published in 1921 the findings of its first investigation covering Income in the United States. This study was undertaken because of a "desire to learn whether the national income is adequate to provide a decent living for all persons, whether its distribution among individuals is growing more or less unequal and to sift the divergencies among the current estimates." The report is a small, readable volume which deserves to be, as it no doubt usually is, upon the shelves of the working libraries of social workers. Dr. King's figures have been brought up to date by Dr. Copeland in Volume two of Recent Economic

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Changes in United States, just published by the Bureau for the Hoover committee. It is an excellent plan to have such familiarity with the figures presented in these reports as will uncover the errors in the assumptions commonly made. Arguments for equal distribution were rudely shaken when it became known that the huge national income for 1 9 1 8 , about sixty-one billion dollars, made possible a per capita income of only $586, or of $ 3 7 2 when reduced to terms of prices in 1 9 1 3 . The character of the actual distribution of that year is of far-reaching significance. Eightysix percent of the persons gainfully employed in 1 9 1 8 had incomes of less than $2,000. Sixty percent of the national income went to persons who had incomes of less than $2,000, and about 40 percent of it was divided among 14 percent of the gainfully employed. By 1928, the national income had increased to nearly eighty-nine billion dollars, or about $745 per capita. T H E BUSINESS C Y C L E

Perhaps the statistical work that is of greatest interest just now to economists, to business men, and to social workers as well, is found in the measures applied to that bewildering phenomenon of our modern business economy which we call the business cycle. This belongs to the modern era of money incomes, large-scale production for wide markets, and credit, and differs from the earlier economic fluctuations. We live today under its domination, and are almost as conscious of its passing as we are of the calendar months in the year, for so many of our

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most important plans are affected by it. T h e anticipation of the next stage in the cycle, the estimate of what its character will be, may have a more important effect upon conduct than the change itself. T h e business man makes all his plans on the basis of what he thinks the market will be. T h e worker looks forward to higher wages or leads a craven existence because he does not know whether his job will vanish overnight. Although we have dispensed with some of the romantic explanations which used to be advanced to explain the cycle, we still know little about the many interrelated factors which produce the ebb and flow of prosperity. It has now become the object of serious study; one of our most distinguished economists, Dr. Wesley C. Mitchell, has devoted twenty years of his life to the subject. His book entitled Business Cycles, the Problem in Its Setting, published in 1927, contains a great deal of interest for the general reader. The outpourings of the many organizations and business services which exist to study and forecast the condition of business are all intended to serve as guides for special purposes, but the ordinary person continues to be inhibited by his "hunches" as to what is going to happen or to be stimulated by anticipations of a bright future which has no other foundation than his own optimistic nature. Dr. Maurice Hexter has recently advanced factors in explanation of prosperity and depression which have real importance for the social worker. H e makes suggestions for a new social technique. In his Social Consequences of the Business Cycle, published in 1925, he describes the cycle of social welfare, which, with Dr. Berridge, he

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believes is produced by the fluctuations in economic prosperity as they affect wage earners. " I t is clear," he says, "that if we are interested in the relationship between sociological variables and economic conditions, we should subject the former, so far as possible, to the refined analysis that is used by economists in growing numbers in their study of economic situations." H e points out factors influencing the business cycle itself, which have been neglected by the economist: Business enterprise is the application of mental effort to the transformation of our physical environment. Anything which affects the emotions of men must necessarily affect their ability to make decisions, or postpone decisions. If these times of postponed decisions or accelerated judgments or stimulated efforts are not isolated, but run in wavelike movements, we think that there may be something to the suggestion that varying birth-rates and fluctuating death-rates can and do affect business cycles. T h e eras of optimism and the eras of pessimism may be closely connected with these variations in human emotions. It may well be that these waves of emotion which run through society from time to time are very closely related to these variations in births and deaths.

Dr. Hexter points out that sickness in the family may so depress and divert a business man that he will postpone decisions. To the extent that this is general, a slowing-up in business activity may show a relation to the community morbidity rates. Conversely, a birth in the family may bring in a mood of exhilaration and an urge to make provision which shall be adequate for the needs of the child. Thus increased business activity may be found associated with an increase in the birth rate. From the records of the city of Boston and of Suffolk

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County from 1900 through 1 9 2 1 , he made a study of five series: The The The The The

monthly birth rate monthly still-birth rate monthly death rate number of marriages monthly number of divorce cases filed monthly

In these he found present a long-time trend. The birth rate, still-birth rate, and death rate decreased, and divorces increased nearly three times as fast as marriages. Marked seasonal fluctuations were present. March was the heaviest month for births, deaths and divorces, June the heaviest for marriages and the lightest for divorces and deaths. He removed the trend and the seasonal variations and then discovered correlation between birth rates and wholesale prices. The maximum correlation was reached when the birth rate lagged one month behind the cyclical fluctuations of the wholesale prices $ the maximum (negative) correlation when the birth rate lagged by seventeen months. Following a similar method, in a study published in 1927 by the Massachusetts Child Labor Committee, Dr. Hexter has presented us with an index of juvenile employment and the means of locating the causes of the mobility of juvenile labor. H e shows how child labor registers the changes in economic circumstances of the children's families. All of this is very encouraging. It suggests the possibilities of more exact measuring and consequently of more control of social standards. Such measurements

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depend, however, upon the availability of complete and dependable records. These are clearly the responsibility of the social worker who intends to have a scientific basis for his future work. A REVOLUTION IN RECORD K E E P I N G N E E D E D

In the old days, records were kept mainly for use in connection with a particular piece of work. They were seldom referred to except in connection with it. Usually they were (alas! they still are) salted down and stowed away with little regard for their value, when arranged in a time series, for displaying the trend in the phenomena concerned or with regard to the possibility they held for demonstrating correlation between factors in the situation studied. Available records are still woefully incomplete. It all too frequently happens that important questions concerning our experience cannot be answered because some data are lacking which might easily have been obtained at the time the record was made. We should, for example, have far better information than we possess regarding occupational hazards, and the lack of it prevents many a sufferer from enjoying the protection of the workmen's compensation law. I recall my keen disappointment only a few years ago, after the establishment of one of the first industrial clinics, the joint project of a great hospital and a great medical school. Provision had been made for keeping records of the occupations of all patients and an excellent statistical set-up installed for handling the mass of material concerning occupational conditions and health. My own attempts to make use

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of it were practically without results. In spite of records in quantity sufficient to make conclusions very impressive, no significant conclusions could be drawn because neither occupations nor diseases had been classified in enough detail. Such a designation as "boot and shoe worker," as given in the clinical record, concealed the characteristics of particular operations which might have had causal importance. No classification had been worked out of the operations themselves or of the conditions under which they were performed. Many of these records failed to indicate the amount of time which the patient had spent at his work, and therefore the time during which the effects operated—an important factor. Consequently the workers could not be compared in this respect. Of course, information on such a point is often difficult to secure, and complications grow out of the fact that in some cases work is continuous and in others not. Nevertheless, the value of the information for any research on the health hazards involved is clear enough. Similarly, the hospital's records of nationality or birthplace were incomplete, so that it was not possible to compare the way in which different racial or national groups react to particular health hazards in industry. Finally, a big obstacle was encountered in the character of the classification of diseases. The one in use by the medical profession is far too general to reveal occupational effects. Clinical experience will not teach us much of the nature of the effect of work upon health until new classifications of occupations and of diseases are accepted and used in the records.

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MEASURING T H E E F F E C T S OF SOCIAL LEGISLATION

W e should be in a position to make better reports than are now available of the actual effects of the whole body of our protective legislation and of the provisions for social insurance. I am convinced that we know very little about what is accomplished by the workmen's compensation law, and whether the intent of the law is carried out. W e do not know to what extent the risk of industrial accident is actually spread. M y conviction rests largely upon the results of a study made possible by the cooperation of the New York Charity Organization Society, which permitted me and my students to examine its excellent records for what information they might yield as to the economic status of injured workmen. T h e material included the case histories of 201 injured persons who had been clients of the Society after the injury. T h e data afforded a comparison of the earnings of men and women before and after they had been hurt, and it was found that more than half of the workers studied resumed work at lower weekly wages than they had formerly earned. In some cases, the reductions were such as to bring the workers to actual dependency. A principle fairly clearly established by the New York law is that the injured worker shall receive two-thirds of his former wage during disability. T h e records indicated that the compensation actually paid to workers was frequently not so much as this. More than a third of the workers studied were in the group who received the statutory limit of weekly payments, that is $20. In the case of about fifty workmen who earned in excess of $30, the

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operation of the limit prevented them from receiving as much as two-thirds of their wage. The actual effects of the two-thirds rule was such as to bring its wisdom into question. The fraction is an arbitrary one and bears no necessary relation to the need of the worker. The histories also made it clear that the "waiting period," before the expiration of which compensation payments could not legally be made, had had an important effect upon the economic status of the workers. About a third of them applied for aid during this period, when the family income felt the shock of the sudden wage stoppage. Finally, the records showed the need of a special study of the psychological effect of compensation payments. There are many aspects to this. The lump sum payment may seem to the worker unaccustomed to large amounts, wealth which justifies expenditure which is unwise, as a number of those actually made proved to be. Uncertainty about a pending award brought many serious strains. Such findings as these give hint of the conclusive and definite information which might be drawn from records kept for the purpose of revealing the effects of the law. The analysis cited was often curtailed because the data were not full at just the points where they would have been highly significant for this purpose. BIGGER AND BETTER STATISTICS

The methods by which social measuring is done are now in the process of development. Striking changes have been taking place in the subjects which have engaged

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the attention of the statisticians and also in the refinement of their methods. This can be shown by comparing a

volume of the Journal of the American Statistical Association of ten or eleven years ago with the volume of last year. Ten years ago there was a predominant interest in vital phenomena, but otherwise no particular field of emphasis. The 1 9 1 7 volume contains among its leading articles those devoted to such scattered subjects as "the correlation between the vote for suffrage and the vote on the liquor question," "Florence Nightingale as a statistician, " "the mortality of our public men," "the agricultural element in our population," and the "budgets of Smith College girls." In contrast, for the last few years the major space has been devoted to more and more minute measurement of the economic changes, and we find such articles as "adjustments for the influence of Easter in department store sales," "factors affecting changes in short term interest rates," and "methods of forecasting hog prices." Two other contrasts are immediately noticeable. In the volumes of ten years ago, the lay person would have found a good deal to interest him. The subjects were not only diversified, but the articles were easy reading. There were few cabalistic signs to give one pause. The bars and diagrams, the simple tables, graphs and averages, were easy to understand. The lay reader of the current issues can get only a little way without discovering that the statistical language has become complicated—and if he masters link relatives and index links, it is only to come upon mathematical formulae which are altogether beyond him.

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More important is the interest in the future, rather than in the past and present. W e are concerned with trends and tendencies, and their interrelation, with the forecasting of these. Certainly we are far enough along with the method to leave no excuse for failing to use it at the places where social policy is thwarted because of insufficient analysis of its experience. It is a scandal today that we have no reliable retail price index. It is more than a scandal that we probably know less about the unemployment situation in the United States than is known about that of any other industrial country of importance. The President's Conference on Unemployment in 1921 revealed the hiatus in our information. It proceeded cautiously and did not make an estimate of its own, but reported: T h e conference finds that there are from three and a half to five and a half million unemployed, variously estimated.

A good deal of time has elapsed since then and our information has not been greatly extended. W e are still in ignorance of the number of unemployed, who they are, and where they are. W e need information as to their age, sex, the trades they have worked in, and many other things without which it is not possible to formulate an employment policy to fit the situation. The new report of the Hoover Committee on Recent Economic Changes (a committee of the 1921 Unemployment Conference), although it has not given us additional data on the unemployed, has furnished a comprehensive report, many sections of which will make interesting reading for social workers. Taken together,

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they reveal the pattern of our present economic organization in a way which sheds light upon many twilight zones. The gathering of facts and the measuring of the relationship of various tendencies is not the end of the story, however. If it is the obligation of the economist to do these things, is it not the further obligation of the social worker to help interpret them? What of it that the national income is distributed as it is? How is the individual family to fit into twentieth century economic life more successfully because of the information secured? What do we still require to know before this adjustment can be a better one? By answering such questions as the last, the social worker may claim a right to participate in direct research, to show where the lack of information is so great that search for it must have first place in future programs.

Ill W H A T CAN A COMMUNITY How

M U C H SHALL W E

AFFORD?

GIVE?

Long before any community had aroused itself to ask what it could afford for social work, individuals had wrestled with their consciences as to how much they could or should give to charity, following the old injunction to "give as the heart prompteth." There was often trouble with the heart. It might be a black heart. Whatever its color, the uninstructed heart has never prompted in such a way as to satisfy actual community needs. It has not proved a sufficient urge to draw enough from pocketbooks to fill the community chest. Certainly the willingness of the individual heart did not supply enough for the national projects behind the Liberty Loan campaigns. It was necessary to stimulate it to more generous giving by all known forms of pitiless publicity, accompanied by social ostracism in the case of the reluctant or niggardly giver. The scale of the programs with which the war planning made us familiar, together with the increase in the size of money incomes during the ensuing period, led to the undertaking of huge projects by social agencies and to the consideration of new ways by which individuals could be induced to give the money to support them. The question of what a man can afford to give to charity, therefore, continued to be pressed, and in 1918 M r .

WHAT CAN A COMMUNITY

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47

E. A . Karelsen persuaded the American Economic Association to take under its auspices his plan for offering prizes for the best essays which should answer the question: What Can a Man Afford? Those receiving prizes were published and are well known for the clear presentations of a great quantity of valuable information and its thoughtful treatment. T h e essays, and especially the one winning the first prize, were really not so much concerned with fixing the size of an individual's contribution to philanthropy as with the large implications regarding the community's needs and resources. THE

E C O N O M I C RESOURCES OF S O C I E T Y

It is difficult to measure the total economic resources of society, and partly on this account we behave a good deal as though no limit existed. W e have wasted our natural resources and continue to do so, even though we are in sight of the exhaustion of some of them. Recently, I heard a geologist lecture upon the mineral deposits of the United States. H e concluded the discussion of each one with a sentence which was almost the same in each case: " I f we continue to consume this resource at the present rate, the supply of it will be exhausted in blank years." T h e community resources, huge as they are, are actually limited and may easily be depleted. As stated in a foregoing lecture, we now have the satisfaction of knowing that we have in this country the largest national income and the largest per capita income in the world. Last year (1928) the staggering total was about eighty-

4

8

WHAT CAN A COMMUNITY

AFFORD?

nine billion dollars, which, if evenly divided, would give us each $745 to spend. Legislative committees on appropriations, with power to cut off resources for a particular project, may be vexatious obstacles to encounter, yet it is wholesome and only fair to consider the comparative value of the things for which it is proposed to spend money, when a little of it must be made to go a long way. It is wholesome to have to meet the question as to whether something we consider of high importance, as for instance, social work itself, is not in fact in the luxury class, an item which might be done away with altogether, or whether we can point to results from expenditures already made of such a character that they constitute a claim upon the community's resources. BUDGETING AND SAVING

The spending of individuals, and of communities as well, is done partly with reference to an immediate program, and partly in consideration of something to be achieved in the more or less distant future. For maximum effectiveness, the money about to be spent must be budgeted and if large programs are to be made possible in the future, some of the present income must be put by for use then. Only a small part of the country's income is budgeted at all. This inevitably means that more important community needs suffer because less important ones receive disproportionate attention. Projects are separately financed and the income is distributed in much the hand-

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AFFORD?

49

to-mouth fashion which characterizes the spending of a wife who must ask f o r money each time she pays it out. Although the community plans public works and social services, which must somehow be paid for out of resources not yet realized and therefore uncertain in amount, its more immediate undertakings are financed from funds definitely limited, and for this reason we often have to rob Peter to pay Paul. T h e community does have to choose whether it will have more and better schools or more and better roads. But instead of weighing all the items for which expenditure is to be made, after the fashion so persistently recommended to the family with a small income, the national income is divided up in a logrolling fashion by those interested in one item and willing to sacrifice another without weighing its importance. Very little consideration is given to the long-time effect which the spending on things such as health and schools has upon other items. When we equip a new factory or a new house or a new automobile, we consider whether large initial outlays invested in good materials will not much more than offset the tinkering and repairs we shall have to make constantly if we economize at the start, but we do very little accounting to satisfy ourselves as to whether more and better schools and more and better health work now would halve the bill for relief later on, the Minority Report of the Poor Law Commission in 1909 notwithstanding. In addition to the projects which individuals privately promote as philanthropy or civic and social welfare, there are four main channels through which money is expended

5o

WHAT CAN A COMMUNITY

AFFORD?

for the objects to which social work is dedicated. These channels are national and local governments, voluntary social agencies, and business units. A study of the items in the budgets of these goes far toward indicating the accepted standards of social values, for an old adage might be changed to read: " T e l l me what you spend and I will tell you what you are." N A T I O N A L SPENDING

An analysis of the expenditures of countries made by the League of Nations in the Memorandum on Public Finance, 1922-26, shows striking differences in the spending of different countries. For instance, we find defence amounted to more than a fifth of Italy's total expenditures, but only seven percent of Germany's, and six of Australia's. Pensions for public employees took more than 10 percent of the totals for Great Britain, France, Germany and the United States, but less than 2 percent in Norway. Social welfare and public health together range from nine to ten percent in the cases of Great Britain and Norway to less than three in the case of Italy. The public debt absorbs more than a third of the total in the cases of Great Britain, France, Belgium, and the United States, Brazil and Denmark, and less than twelve percent in the cases of Sweden and Denmark. Comparisons of expenditures for social services made by different countries are, however, to be made only when it is remembered, that in some cases, as for instance in the United States, responsibility for these is left with the separate states instead of being assumed by the central government, as in the case of Great Britain.

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51

The primary purpose of national expenditures for social services is certainly the welfare of the state, but there is grave danger that money will be spent with an eye first to the effect it will have upon the record of the party in power and the social worker may find cause for criticism in the actual social effects which result. An important example in point is the effect of the expenditure made for unemployment insurance as it is described by J . C. Pringle. In an article in The Social Service Review for June, 1928, he distinguishes the political from the social effects of the scheme as he has seen it work out. He says in commenting on the passing of habits of thrift: W e social workers are asking whether it was sound to cut across these finely established habits and conventions with an arithmetical scheme.

Acknowledging his own point of view as changed by the actual results which he observed and studied, he challenges the perception of those who think that a "redistribution of assets and a reconstruction of machinery" will do for people what the latter can accomplish only by their own initiative. What he has to say about the spending of money under the insurance scheme, which he thinks has detached workers from their industries and made them believe that it is their fate "perennially [to] subsist upon public assistance," is based on the study of people who are his clients and whose habits of life and work he has seen at close range. Criticism so derived will always be needed from social workers to make certain that questions are being dealt with on

52

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AFFORD?

their merits, rather than with first thought for the political effect of the methods chosen. We have had all too little criticism by social workers in the United States of the working of the several provisions for the use of Federal money when matched dollar for dollar by appropriations from the states. The work of "vocational rehabilitation of those injured in industry and otherwise," as made possible in the Federal act of 1920 on a basis for sharing the financial burdens equally between the national government and the states which elect this opportunity, affords a place for helpful comment. If the experience of the different states were exhibited for comparison, and the difficulties and the advantages of legislation so administered brought to light, an advance in methods of practice and a clearing of objectives could scarcely fail to result. M U N I C I P A L SPENDING

American cities are rapidly increasing the sums annually expended from their treasuries and the number and variety of the items in their budgets. A rather striking uniformity begins to appear in the percentages which some of the more important items absorb from the totals. This is especially true of those items which are growing in relative and absolute size, as, for instance, schools, which today, almost without exception, secure the largest net expenditures. The expenditure per child attending school has in many cases doubled within the last ten years and often exceeds one hundred dollars. Charity, on the other hand, is one of the smaller items and the percentage accorded to it does not show a ten-

WHAT CAN A COMMUNITY

AFFORD?

53

dency to grow. In some cases the total expended under this caption exceeds that raised for the community chest in the city; in others it is not so large. "Charity" accounted for only four or five percent of the totals, over a period of ten years, in the cases of ten cities in Massachusetts, whose finances I have recently had an opportunity to study. These cities, with a per capita average for all municipal expenditure of nearly $60 in 1927, averaged less than $2.50 per capita for charity. The changing objects of municipal philanthropy are indicated to some extent by the change of names borne by the administrative officials. The former "overseers of the poor" have become members of "Boards of Public Welfare." In Massachusetts, a state law now forbids the designation "almshouse" for the institution which has become a "city infirmary." "Paupers" and "public charges" are now "persons in need," or "in receipt of relief" or "poor persons." In the administration of duties resulting from state legislation, as in the Mothers' Aid laws, the functions of the "Boards of Public W e l f a r e " have been greatly increased and their practices probably much improved. The whole field of municipal expenditure has doubtless greatly benefited where the state has required uniform municipal accounting and has published municipal expenditures in comparable form. SPENDING BY SOCIAL AGENCIES

The report of an investigation made under the direction of Dr. W . I. King, and recently published by the National Bureau of Economic Research, has given us an

54

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AFFORD?

opportunity to see the way the wind is blowing in so far as the agencies of a single city are representative of the experience of the rest of the country. In Trends in Philanthropy, Dr. King has subjected to analysis the philanthropic history of New Haven, Connecticut, over a period of twenty-five years. During this time there have been conspicuous changes in the objects for which the major part of the money was spent. T h e percentage for health work increased from 17 percent in 1900 to 35 percent in 1925. On the other hand, the amounts spent for religious work shrank from nearly a half to about a quarter of the total, but have remained stationary since 1919. T h e amounts spent for secular education increased but remained a small percent. T h e steady item was relief of the poor, which took about a fourth of the funds of the philanthropic organizations of New Haven from 1900 to 1925. T H E S O U R C E OF CONTRIBUTIONS

This report throws light upon the source of the contributions to social agencies. Contributions from living persons have been the chief source of receipts throughout this period. The per capita contributions averaged about the same at the end as at the beginning of the period, but the indications are that "large gifts are much more important in swelling the aggregate" than the small ones. Nearly two-thirds of the aggregate was received from persons contributing one hundred dollars or more. This point has bearing upon a policy often discussed by social workers; whether it is a better plan to receive support from a large number of persons, the majority of whom

WHAT

CAN A COMMUNITY

AFFORD?

55

can give only small amounts, or to secure large gifts from those of great wealth. More than half of the contributions in New Haven were under five dollars—and nearly three-fourths less than ten dollars. The small ones were not numerous enough to mass a large proportion in the total. The agencies were able to operate as they did only because of the sums given by large contributors. It may be assumed that social agencies have wanted the support of many contributors, not so much because they supposed that the largest totals could be secured from many small contributors, as because of the expectation that their active cooperation and moral support would follow the contribution, making the work of the agency more democratic through its further socialization. But it becomes a question as to whether the time and other costs in maintaining them as contributors does secure an equivalent in non-pecuniary help. It may be that even more effective ways may be discovered for getting a widespread reaction from the public in general to the work of social agencies. The distribution of the national income is such that large contributions must be continued as a source of the bulk of the funds. T H E A P P O R T I O N M E N T OF F U N D S

One turns to the annual reports of social agencies, expecting some clue to the scale of importance of social needs, since these reports are used largely to prove to present and potential contributors that they afford opportunities for good investment. I have just been reading the excellent report issued by the New York Charity Organization Society. It gives abundant evidence of the

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AFFORD?

growing practice of measuring and analyzing the program of work. It makes conspicuous the overwhelming importance of the industrial factors in social maladjustment and of unemployment as the ranking problem in the 4,666 families whose needs are analyzed in the report. Unemployment and under-employment were found in more than half of the families, or more frequently than any other "problem," to use the term for the unit counted. This report also tells what the society did toward solving the problems. In the case of unemployment, it was able to find work for only a little over a fifth (22 percent) of those desiring it. W h a t the report does not show (and what would, I suppose, be difficult cost-accounting), is how much it cost to do this, or whether this major problem had a major part of the financial resources devoted to it. In fact the text calls attention to the fact that the conspicuous "trend" in its work at present is not economic adjustment but a new awareness of "emotional maladjustment." It is not to be assumed that it does not continue to be aware of the fundamental economic maladjustment. Doubtless much of the effort of this society did relate itself to the problem of unemployment in ways not indicated on its accounting sheet.

THE

S O C I A L E X P E N D I T U R E S OF BUSINESS

UNITS

It is important to consider that, after all, what a community can afford is pretty closely related to what industry can afford. There is one amusing instance of an attempt on the part of a community to extract from an

WHAT CAN A COMMUNITY

AFFORD?

57

industry all that the traffic would bear. This is the story of the famous town of Hibbings, Minnesota, and its annals, (before it was picked up bodily by the same industry from which it had drawn so handsomely and moved to another site). But before that happened, the town reaped large returns from the fact that it had within its territory iron mines producing twenty-five million tons of ore a year. The town's energetic mayor saw in them an opportunity to make the tax returns adequate for community comfort—rather community luxury—and the law upheld him. Mayor Vernon L . Power, the onetime blacksmith's helper, had the problem of spending $3,000 a day, the story goes, in a town with only 1 , 3 1 8 voters. And so it came about that the municipal payroll amounted to $500,000, and the fire department fitted up quarters for the laddies with handsome rugs and player pianos. T h e education department spent without stint and with corresponding returns in excellent schools, the parks had $100,000 lavished upon them in a few years. Having reached a limit of expenditure in many other directions, each street corner was furnished with forty lights that it might have greater luminosity than Cincinnati. Yet, so affluent was the industry which had made possible all these good things, that its enforced contributions to the community did not materially affect its own prosperity. In contrast, we have examples of industries which have voluntarily undertaken in welfare work more than they later found they could afford. Such was the case with the Crocker McElwain Paper Company, which launched a scheme of stabilizing employment by offering old age

58

WHAT CAN A COMMUNITY

AFFORD?

pensions, and later discovered that the very success of the plan made it prove too expensive. The number of employees who remained and became entitled to pensions made the cost of insurance too high. Such an experience may have some significance in determining spheres of expenditure appropriate for community versus financing by particular industries. T H E S O C I A L W O R K . P O L I C I E S OF L A R G E I N D U S T R I A L CONCERNS

One result of the increased size of the modern industrial establishment is its concern with such matters as community health. We are familiar with many singleindustry towns where the community's resources are those of the industry. Even within its own budgeting, the industry may make expenditures for precisely the items which appear on the accounts of social agencies. An instructive example of this is the plant of Cheney Brothers at South Manchester, Connecticut. In this attractive little country town, amid sylvan surroundings, the manufacture of narrow and broad fabrics is carried on from raw silk to the finished product in the largest silk mills in the United States and in the world. Mr. Howell Cheney has made very explicit statements of the point of view taken by the company in regard to the expenditures made for health work, and has analyzed the results from such expenditures. H e begins by reminding us that those directing industry in corporate form are trustees, and the use they make of capital must be conditioned upon its bringing a profit to

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59

the owners. Under this form of organization humanitarian benefits which might result from expenditure for welfare work do not justify the diversion of income from profits, "unless the results may be shown to have some relation to profits or to a responsibility defined by law, or by a moral consideration so strong as to have the force of law. m Mr. Cheney goes on to say: In the field o f industrial health it is difficult to trace a direct relationship between protective measures and either profits or legal responsibility.

I t is comparatively easy, however, to estimate the probable

losses due to physical disabilities o f a preventable nature, a n d , w h i l e not as easy, it is sometimes possible to demonstrate that expenditures can reduce these enormous losses by more than the amount e x p e n d e d . T h e w r i t e r believes, t h e r e f o r e , that w e shall make f o r more rapid progress towards a partial solution o f this problem if w e work through economic demonstrations, rather than through the paths o f legislation with all the animosities and disputes w h i c h that entails.

It has been calculated that the cost of replacing a skilled employee by an untrained one runs in the silk industry from $25 to $300 per employee. In replacing the turn-over of about 1,350 employees, at an average cost of $150 there would result a minimum loss of $202,500. About 20 percent of the turn-over may be laid to physical disabilities. The three items of the employer's loss from this cause were figured to be approximately as follows: '"Code of Relation! Between Management and Employees," by Howell Cheney, in Industry (published by the Associated Industries of Massachusetts), Vol. XI, August 4, 1923.

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Cost of idleness due to replacing of old employees with new ones, because of transfers and layoffs due to s i c k n e s s . . . . $ 40,400 Cost of idleness dne to absence from sickness 225,000 Cost of reduction in production incidental to the loss of vitality of those at work caused by illness 56,250 $321,650

But the employee has also lost through the interruption of his employment: I f the employer has lost this amount in production, the employees have lost another amount in wages and in expenses incidental to illness. There is a further speculative loss to the community in charitable rel i e f , in bad debts and in expenses arising out of contagious and infectious diseases which are beyond the power of visualizing even in imaginary figures.

These losses are also approximated in figures: Direct loss of wages because of disability Medical, nursing and surgical attendance, etc Social and charitable relief

$218,700 45,000 56,250 $319,950

A reduction of the average absence from 4J/2 percent to 3 percent, or one-third, should theoretically reduce the average loss per employee by $40, or from $ 1 2 0 to $ 8 0 per employee per year. T h e cost of maintenance of a fully equipped medical department and clinic should not exceed $ 2 0 per year per employee, and according to the figures of the National Industrial Conference Board, such facilities might be conducted at $ 1 o per year per employee. Our experience, however, has been nearer the $ 2 0 figure. . . . Here even the field of speculation ends and we are unable to prove that this expenditure of $ 2 0 per employee per year will accomplish a saving of $40 per employee per year. Proof is lacking because we have no exact records of absence from sickness previous to the estab-

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61

lishment of our medical department, bat if we have only reduced the absence from illness one-sixth we w i l l have recovered the co«t of our medical department. PROFITS, TAXATION, AND FUNDS FOR SOCIAL WORK.

The funds available for social work may be reduced by the financial policies of business corporations and also by the taxation program of the state. T h e insistence of the owners upon high profits may absorb what another policy would allocate to an extension of welfare work. Indeed, profits may absorb even that part of the earnings which should go to replace the worn-out equipment and to add to it. Fresh additions of capital are needed to provide for a larger income in the following year. The goose that lays the golden egg must not be allowed to die or even to become sick. Yet industries have suffered from the greed of their shareholders for present profits to such an extent that they have become undernourished and finally ceased to produce profits. The troubles of more than one cotton textile establishment in New England are ascribed to just this cause. The tragedy which in 1921 loomed upon the horizon of the Lancashire cotton textile industry in England is largely the result of a similar cause, although when disaster overtook the industry, in which mammoth fortunes had been amassed during the war, its machine equipment was of the finest. But the cotton men had abused their golden goose. Instead of putting back real capital they had inflated the stock and financed the industry through enormous loans upon which, when the tide turned, they could not pay interest charges.

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AFFORD?

Industries which are too heavily taxed may be prevented from expanding fast enough to give employment to the increasing population. In such a case the community loses not only the workplaces but part of its income in the form of larger taxes. W H A T C A N A COMMUNITY AFFORD?

T h e question of what a community can afford should not be answered until the social worker has been heard from. A community can usually afford to pay what a service is worth to it, and its failure to provide itself with the social services it should have is almost always because it has not been made to understand their value. T h e social worker knows better than anyone else, for instance, what the returns have been from the protective legislation for women and children. Can a community afford to spend more for industrial rehabilitation? Is it possible for the social worker to show that the community cannot afford not to spend more than it does? Would other and possibly larger expenditures for these services yield a better consumers' surplus? W e rarely question the value of the great public services, such as workmen's compensation, once they are established. W e like to congratulate ourselves that, in passing a workmen's compensation law, we have thrown security about the worker who is exposed to the risks of industrial accident. The public knows little about the ultimate effects of that law, but the social worker has opportunity to see how often the expenditures made because of this legislation fail to bring the results aimed for. Because of the delays and uncertainties in administration, it may

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63

actually be the means of "detaching workers from their industries," as the English unemployment insurance cited by Mr. Pringel. The amounts which finally reach the injured worker may in no sense be a "compensation" for the loss of his economic foothold. Finally the social worker has knowledge of the changes in the social status and the individual outlook on the world which are part of the loss sustained. The social worker who has the data from which to measure all these effects is in a position to advise what the community should afford in the face of the new risks associated with modern industry. Of course it is not on a basis of his individual impression and judgment that the social worker should advise upon the expenditures for social services. Here is the chance for him to apply his improved technique for social measurement, to exhibit gains and losses by measured proportions. If he utilizes his opportunities to make his work of widest usefulness, will he not be constantly reporting to the community regarding those things which it can and should afford?

IV THE BARGAINING POWER OF GROUPS AND INDIVIDUALS T H E DOMINANCE OF O U R ECONOMIC ORGANIZATION

Ruth Benedict, a distinguished American anthropologist, contends that you can never really understand the culture of a people, be that people primitive or sophisticated, until you have found out what thing it is they put in the forefront of their lives. For there is always one aspect of their living which is central in the pattern and dominates the rest. For instance, if you went to the reservation of the Zuni Indians in New Mexico and had the skill to read their culture, you would find out that with them religion is the thing which always comes first. It impregnates their whole life. Agriculture is made incidental and cannot be successful without the aid of elaborate ceremonial. The dances, the constant and almost comradely intercourse with the friendly dead, the u-wan-nam-i, the whole routine of daily life, is carried on with reference to its religious significance. Other Indian tribes, at the height of their culture, although also religious, gave the prominent place to military organization or made the chase the prominent thing. The great European and oriental civilizations may also be classified in similar fashion. The thing which has become more and more the forefront of our lives in modern occidental society is our

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commercial and industrial organization. It may seem a waste of time to point this out, so obvious is it, but the extent to which it is true can only be realized by contrasting our own culture with that of a people whose economic organization is secondary. Dr. Ralph Linton, who has recently returned from a study of primitive people in Madagascar, presents such a picture in telling of the life of the Tanalas, the people of the woods. Their higher social classes, the royal gens and the hereditary King, maintain their position in the society without differentiation of economic status. They all, including the king, cultivate their rice fields in the same way and live in the same kind of huts. The sole distinction seems to be the privilege of being addressed with special ceremonial —so that it appears to be a society built upon a kind of swank. Contrasts with ourselves, in the place given to economic activities, exist even among western industrialized societies. Dr. Wesley Mitchell has reminded us of the comparative indifference of the French to the game of business, of how much more ready they are to leave it before their powers are spent and settle down to other interests on a small income. H e suggests that the much narrower fluctuations in French business are related to this difference in taste. T H E CONTRACTUAL RELATION AND BUSINESS OPERATIONS

All these business activities which so preoccupy us are the result of the making of bargains. We are always making bargains. We buy and we sell, we work for wages and salaries, we offer for sale food, luxuries, the

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use of an apparatus to send a wireless message, the right to a seat in a train. W e surrender something we possess or we perform a service in exchange for something which is, we think, more than an equivalent. All business is the making and executing of contracts. Having made the agreement, we are legally bound by it, for this making of contracts is implicit in our system of property and the law recognizes in them property interests which it will protect. All contracts are not entered into with the expectation of getting from them the same amount of satisfaction. W e know ahead that some exchanges will be good bargains, that the consumer's surplus, as we say, will be large. Another time we have no pride in what we have done j we feel cheated. U N E Q U A L D I S T R I B U T I O N OF BARGAINING P O W E R

Usually this is because the two parties to a contract are not equally free. For instance, there are forced sales, where the owner is under constraint and reluctantly parts with his possession because he cannot afford to wait for a more reasonable price. He has not the power to withhold the thing he sells from the buyer who has offered him the low price and will not raise it. This is especially true with the sale of labor for wages. A man is not as free to refuse terms of employment on the tenth day out of work as he was on the first day. His liberty of contract has then become actually less. In words used by Justice Holmes: "Liberty of contract begins where there is equality of bargaining power." Economic power is everywhere seen to be p-ice-fixing.

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POWER OF GROUPS

67

When either as buyer or seller you must give or take at a price, your power is weak. If you are so fixed that you can wait for the price to go down or up, then you are a strong bargainer. Your consumer's surplus is large. P E C U L I A R I T I E S OF T H E W A G E BARGAIN

The social worker is handicapped in the task of adjusting the wage-earner in his economic and social environment unless he grasps some of the peculiarities of the worker's position as a bargainer, and especially his present predicament in a changing economic organization. It is first of all evident that he is often at a disadvantage because he cannot wait to sell. Obviously if he does not sell today's labor today, it will never be sold. H e cannot turn back the calendar. Second, his stakes are very high, because his wages are his only means of subsistence, so that not to trade at all may mean to go hungry. And third, his bargain remains a personal thing. H e may sell for a high wage and still be dissatisfied because he must himself accompany the thing he sells. If you are selling a ton of coal, it is a matter of small consequence what the buyer does with it, whether it is wasted or used with economy. Whereas it does matter tremendously how and in what kind of place labor is used. These constraints make for peculiar patterns of behavior in this bargainer, which, unless understood, cause him to appear to be a very unaccountable animal. N E W S H I F T S IN BARGAINING P O W E R

The position of the wage-earner today, in addition to the foregoing considerations which grow out of the na-

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ture of the thing he sells, is affected by two factors which have changed the demand for his labor and thus caused new shifts in bargaining power. These are the extension of machine technique and the adoption of the corporation as the prevailing unit of business enterprise. T h e operation of the first factor may be so drastic as to remove the worker from the scene altogether. Between 1920 and 1927, there was a decrease of ten percent in the number of factory workers in the United States, during which time the population of the country increased by more than thirteen and a half millions. Products to satisfy their needs also increased manyfold, but these were made by fewer hands and more machines. T h e shrinkage in the number of factory workers is the more impressive when one reflects that the increase in machinery has always required new work processes. The new machines have to be fed with more material and workers are needed in the preliminary processes of preparing this. More factories have to be built and more goods transported. Therefore, expansion of machine technique may go hand in hand with increased employment. This has been the case, until very recently at least, in the United States. The expansion of industry and the stoppage of immigration have been the chief causes for the sustained demand for labor and the improved bargaining position of workers within the last decades. C O M B I N A T I O N S IN BUSINESS M A N A G E M E N T A N D C R E D I T

As business units increase in size, the worker is more and more likely to find himself one of many sellers (of labor) with fewer and fewer buyers (employers) to

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whom he can offer his commodity, a situation always favorable to the buyers. Up to the close of the nineteenth century, business enterprises grew larger chiefly because of the economies of large-scale production. In the last two decades of the century, the motive which explained the formation of the most important combines was the control over the market gained in that way, including control over the labor market. But the character of business enterprise is changing very fast. We now make our contrasts with the pre- and post-war eras. Wishing to do this, Professor W. Z. Ripley, in his Main Street and, Wall Street, has let Woodrow Wilson speak for the pre-war period, using the words he uttered in an address before the American Bar Association in 1910: W e have witnessed in modern business the submergence of the individual within the organization, and yet the increase to an extraordinary degree of the power of the individual — of the individual who happens to control the organization. . . . T h e r e is more individual power than ever, but those who exercise it are f e w and formidable, and the mass of men are mere pawns in the game. A modern corporation is an economic society, a little economic state — a n d not always little, even as compared with states. M a n y modern corporations wield revenues and command resources which no ancient state possessed, and which some modern bodies politic show n o approach to in their budgets. T h e economic power of society itself is concentrated in them for the conduct of this, that, or the other sort of business. T h e functions of business are differentiated and divided amongst them, but the power of each function is massed. In some instances even the functions are not separated. Railroad companies have been known to buy coal mines. M a n u f a c t u r i n g combinations have been observed to develop a score of subsidiar)' industries, to spread a network of organi-

BARGAINING

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zation over related enterprises, and sometimes even over enterprises whose relation to their main undertakings it is difficult for the lay mind to perceive. Society, in short, has discovered a new way of massing its resources and its power of enterprise; it is building up bodies economic outside its bodies politic, which may, i f we do not find the means to prevent them, the means of disclosing the responsibilities of the men who compose them, dominate bodies politic themselves.

Wilson's plan for curbing the economic power in the giant corporation was to change its legal nature. Corporations were necessary to do the work of the world, but the legal fiction that the corporation was an indivisible person was, he found, the difficulty. Corporations should be treated merely as a group of individuals. The law should go inside and "pick out particular persons for punishment" and so moralize business. Corporations must not be used as "a covert for wrongdoers." It must be noted that Wilson in 1910 did not close his address without pointing out the position of the minority stockholder whose position was to be of so much interest to Professor Ripley sixteen years later. H e said: " I do not wonder that he [the small stockholder] sometimes doubts whether corporate stocks are property at all or not." When Professor Ripley started his vigorous broadsides in the Atlantic and later had us all reading Main Street and Wall Street, it was to warn us of the loss of democracy in the concentration of control within the financial structure of the corporation. H e tells us of his "life-long aspiration to promote a greater equality of opportunity among men, a more even chance of getting a living all round." H e finds that the only justification

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of property in a free state "is that it shall contribute to such equality of opportunity for all members of the community alike, that each one shall be more able to take care of and make the best of himself." H e points out that, along with the enormous post-war increase in popular investment and the development of employee ownership of corporate securities and "customer ownership" in the public service corporations since the war, there has gone on a practical disfranchisement of the small stockholder and gives instance after instance in which by various means there has come about a complete separation of ownership from control. Securities are issued in special form entitling the holders to privileges. All power is centered in the voting shares which may be a fraction of the capital. Thus from different points of view, Wilson and Ripley would find a more even distribution of economic power by reshaping the instruments through which business is done. T H E W A G E - E A R N E R AND CONCENTRATION OF CAPITAL

Of course the wage-earner is affected in more than one way by the fact that he lives in a world of fewer and bigger employers. For instance, as we have intimated, he has often put his savings in the big enterprise for which he works and he then has a stake in it as an investor. But if this gives him no voice in fixing its labor policy—and it usually does not—he is still affected by the size of the going concern in his industry and whether or not these concerns are competing for his labor. In only a few industries today can the majority of workers seek out an individual producer to bargain with.

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It is true that the agricultural worker has this advantage, and coal miners if free to travel about, but not workers in iron and steel, or textiles, and not those in many manufacturing industries. Recently the worker has made the discovery that back of the employer, whether the employer be an individual or a corporation, is another factor forcing his hand. H e begins to see that the organizing genius of the producer is now subordinate to the power of the man or the corporation which controls the credit necessary for further expansion, or even the conduct of the business. Whether there will be more jobs or fewer jobs, even what kind of jobs they will be, may be determined from an entirely new quarter. As business is done more and more on a credit basis, the institutions which give and withhold credit come to have a final say as to how business shall be done and who shall do it. Credit institutions also consolidate and grow to huge dimensions. Only a few weeks ago there was announced a merger in New York City bringing into existence a bank with resources of two billion dollars. COMBINATIONS OF W O R K E R S

For more than a century now, workers have tried to accumulate economic power by combining. As their bargaining position has become more seriously threatened by the increased size of business units, they have resorted to the trade union. By collective action they could withhold more of the thing they had to trade, labor, and thus bring more pressure to bear in making the bargain for its wage. It is significant that trade unionism on a national scale

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began in this country in the same decade which saw the beginning of the modern trust movement. The last years of the nineteenth century, which witnessed the great acceleration of the formation of simple combinations and trusts, was the time of the ascendency of the American Federation of Labor and of the national unions. In the United States, however, it is not true that organized workers have been strongest in the industries where capital combination has gone farthest. The trustified industries, as in the case of steel, have been strong enough to uproot the unions of the workers, or make them ineffective. W O R K E R S ' A T T E M P T S TO EXERCISE C R E D I T POWER IN THEIR OWN BEHALF

One of the latest methods which workers have resorted to in order to build up economic strength, is in the accumulation of credit power in the so-called labor banks. The first of these was founded in 1920 and was quickly followed by others marking the adoption of a new and much debated policy. This new policy was dramatically introduced by the role played by the International Association of Machinists in a strike in Norfolk, late in 1920. It so happened that the Bankers Trust Company held a mortgage of $40,000 on the Crescent Machine Works, where the machinists were on strike. The union, having large credit resources, tried to buy the outstanding obligations of the company. At first the bank refused to sell, but many members of the union were depositors and a sudden

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decrease in deposits occurred. This had the effect of inducing the bank to consent to the sale, after which there was a show-down with the management and conversation was carried on by the union somewhat as follows: " T h e strike is costing you more in loss of business than it is costing us. You can't beat us. You might as well sign. If you don't sign, we'll close you up." And so it happened that an expensive strike was saved, the machine shops were advanced credit by the union, an eight-hour schedule was introduced and the whole strange proceeding received the blessing of Wall Street, The Wall Street Journal commenting: " T h e plan will not have a word of discouragement from wicked Wall Street." T H E W O R K E R IN T H E BUSINESS C Y C L E

The workers' bargaining power is affected most seriously of all by another concomitant of modern business enterprise, that is the business cycle. The long stretches of unemployment, and the fear of no job, even when they are at work, have profoundly affected the bargaining power of thousands of the workers. The ugly question now before us is, whether in place of the alternation of plenty of work and no work, there is something of a permanent downward trend in the ratio of the number of workers and the number of jobs. Only for one year since 1920 have the records in the employment offices of England shown less than a million people out of work. The number unemployed has stood at a million and three-quarters and is today (March, 1929), well over a million. The United States Commissioner of Labor Statistics is inclined to the opinion that we are

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at the "beginning of more or less permanent unemployment" in this country. Mr. Chase tells us that "some mighty corner" had been turned because the number of factory workers, which every census for a hundred years has shown to be increasing, has now, since the War, decreased each year, although the general population has continued to increase. But the worker finds his bargaining power affected by the business cycle, even if he does not lose his job. For him the important fact is that changes in wages do not run parallel with changes in prices and when business is reviving, the price of labor tends to rise less than the prices of commodities at wholesale. Before going further, it is necessary to admit the difficulty of discussing these subjects without inventing examples of things which are impossible to find in the everyday world. Of course it is impossible to find a worker who regards himself as the possessor of so many units of bargaining power. He does not contemplate, in general or in the abstract, increasing combination, the stages of the business cycle, or the growing role of credit control. His experience is always immediate and personal. Actually, the price of his wage may have been determined by an offhand judgment on somebody's part, by some hunch he had about applying at a particular time for a particular job, by the impression made by a chance remark. We invent "the worker" and "the capitalist" and imagine forces playing upon them. As a matter of fact, they are surrounded by circumstances of which they very imperfectly are aware, and which they have not learned to control. We know that limits exist, but we can not

7

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locate them definitely. We have not completed the catalogue of causes and given them weight. A social contribution of great value would certainly be found in a series of case studies which had as their central problem the bargaining power of particular individuals, carrying the analysis out to its furthest ramifications. If individual men are unpredictable, so are combinations of them. The trade unions are hampered by many of the same factors which belong to individuals: imperfect knowledge, trade pride, racial antipathy, political ambition. The actual role they play is never consistently that of economic strategy. Behind everything, that trade unions may do to make the use of a given bargaining position effective, is the play of far-reaching influences which are difficult even to locate. Long sessions of the American Economic Association in December, 1928, were devoted to attempts to explain ( 1 ) the decrease in factory employment in the United States since 1920, and (2) the maintenance of wage rates in the face of decreasing demand for factory workers. As there was no general agreement in the explanations brought forward, I will not summarize them here, but it was assumed that the general trends, except in special cases and for short periods, have not been affected by the trade union activities. Rather they are to be found in such factors as changes in the methods of making goods, in the increased mechanization of industry, involving the use of more capital and less labor, and in changes in the kind of goods for which money is spent. An outstanding evidence of the shift in bargaining power in this country is seen in those industries where the

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strength of the union has been sufficient to bring into operation a plan of joint shop management, as instanced by the agreements in the clothing industry, and in the use of machinery for the continuous arbitration necessary for the interpretation of the agreement. Through the constant adjustment of particular cases, a body of common law for the government of the industry is accumulating. These well-known experiments mark a real accession to power. They are found only in industries where there is a fairly even distribution of power, as plans for joint operation cannot be made to work until each party to the agreement has strength enough to carry out the responsibilities undertaken by the agreement. T H E M O N D CONFERENCES AND T H E

MELCHETT-

TURNER REPORT

In England, for more than a year a series of conferences has been held between trade unionists and a group of manufacturers. These are known as the Mond conferences. They suggest new parts to be played in the industrial relations in that country. In the late fall of 1927, Sir Alfred Mond, who has since become Lord Melchett, wrote to the General Council of the Trades Union Congress suggesting a conference for the joint review of the whole field of industrial relations. Labor accepted the invitation and the conferences began with a recognition by both parties that English industries would have to have a thorough overhauling if the present trade depression is to be lifted. It has been assumed in the conversations that the program of "rationalization" in

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some form is now necessary. The particular group of industrialists who were invited by Lord Melchett are representative of what they themselves call the new capitalism. They look forward to the building up of huge trusts and cartels on somewhat the pattern of the Imperial Chemical Industries with which Lord Melchett is associated. It has been pointed out that a combination of capitalists might have used the present situation, with its prevalent unemployment, to break the bargaining power of the unions. Instead, the point of view of this particular group of employers is that nothing could be a greater mistake. For the first result would certainly be political reactions which would be fatal to the plans of the new capitalism. It has been explained that: T h e y want the State's support for large-scale capitalism based on the combine, with its close regulation of output and prices; and they realize that they can get no solid assurance of the State's support if they place themselves definitely in hostility to organized labour.

Lord Melchett desires far more than absence of hostility. In return for the part he is willing to assign to labor in the program, he anticipates active labor cooperation in the program of "rationalization." The work of the conference has not had complete support from the ranks of the employers or from the unions. The smaller and some of the reactionary employers fear the program of rationalization as a threat to their very existence and the left-wing unions have seen in the proceedings a fatal compromise with the enemy. The employers' organizations to whom the scheme was re-

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ferred, rejected the plan for a National Industrial Council which the joint conference proposed and which had been accepted earlier by the Trades Union Congress. The joint conference continues to be held, however, and to concern itself with issues of great importance. Its report on unemployment was a constructive measure which recommended public works, trade with Russia, pensions at sixty-five, and the raising of the school age. T H E R O L E OF T H E S T A T E

The elaborate economic system under which we live by exercising bargaining power, unlike our political system, operates without any central control. Nevertheless it does not operate without interference from the state. The state, in the interest of all the people, has attempted to restore a balance of economic power. For instance, this is what is done when railroad rates are limited. Economic power inherent in its monopolistic position is taken from the railroad company and given to the consumers. Before the latter part of the nineteenth century, the practice of the state was to interfere very little. It was widely thought that public welfare was promoted by a system of laissez faire. The effects of the industrial revolution caused a reversal of that point of view, and the state began to regulate business in the interest of all. Machinery was set up and laws were passed to regulate business and particularly to fix limits for the operation of the large combinations so as to preserve free competition. But combinations of workers were also restricted in their operation. The trade union found in its path earlier and even more serious legal difficulties than those which

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beset the business corporations, as illustrated by the famous Danbury hatters' case. W A G E S AND T H E S I Z E OF F A M I L I E S

A recent instance where the government has undertaken to restore bargaining power very directly is the experiments with the family wage. The movement began with the attempt to relieve the plight of government employees whose wages lagged behind the high war prices. In nearly all the continental countries, the practice was a fairly old one for public servants. In 1 9 1 8 , following the government example, French firms in private industry established funds on an actuarial basis from which their employees with families received supplements to their wages in accordance with the number of children in their families. The motives which led them to do this were of course mixed, but one was doubtless to avoid paying as large wage increases as they would otherwise have been forced to do. The number of funds increased very rapidly and by 1925 there were over two hundred of these with three million persons working under a family wage system. Similar funds were established in Holland, Belgium, Germany and also in Austria where, in 1 9 2 1 , the government made the system obligatory upon private industry. The Scandinavian countries were never as hospitable to the plan, and since the War they have almost entirely disappeared from private industry. In England, the family wage was never introduced, but New South Wales in Australia, in 1927, passed an act which required employers to contri-

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bute three percent of their wages bill to a fund for the endowment of children under fourteen in families of small incomes. New Zealand has a system for making allowances to families which are sufficiently impecunious and prolific, the entire expense of which is borne by the general tax payer. There is little question but that such schemes must have influence upon the general wage levels. T H E R O A D TO P L E N T Y

We should grow utterly discouraged in the contemplation of the chaos of unemployment and the many evidences of social injustice that are all about, if there did not arise every once in a while a man with a will to find a way out and the mental energy and creative imagination to put his reconstruction in terms which are convincing. Whether you can go all the way with him or not it would be hard to find a more stimulating proposition and one which is better calculated to make you really analyze the tangle of our ill-distributed bargaining power, than William Trufant Foster's scheme as set forth in his Road to Plenty and Profits. Mr. Foster is one of the economists, of whom there are now a goodly number, who are concerned to make their work available for the layman. His method is an excellent one. He contends that you can understand a subject best by attacking a central problem in it. The problem which he finds central to our system today is that of getting to consumers enough money to buy the goods which our production apparatus turns out. He believes that it is not necessary to attempt changes in the long processes which lead up to the finished

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article. If only we can finance consumption so that the goods will be taken away as fast as they are made, then mills will be kept running, there will be work for everyone, and the phenomenon we call "over production" will be unknown. At present consumption does not keep pace with production, and this is because consumers do not have enough money. All payments which industry makes to consumers are made with the expectation that they will be returned in the purchase of the goods when finished. The expectation is even more, however, for the makers of goods expect to get back all they spend, plus profits. On their side, the buyers of goods are not willing to pay out for consumption goods all they receive. They must and should keep back some for savings. These savings will actually be spent for capital goods instead, and for the production of yet more consumers' goods which cannot be taken. The bad results are stocks spoiled or sold at a loss, and consumers going into debt. Assuming that the problem is to get enough money to consumers at just the right time, Mr. Foster and Mr. Catchings believe it could be solved by a governmentcontrolled apparatus acting for just this purpose. Its machinery would include a board of experts, having for its use much better information than is now available, in the form of employment data and price indices. This board would advise the government on such matters as when to offer employment on public work, taxation, payment of public debts, wages and salaries. Its dicta would be taken account of by private as well as public agencies and a controlled amount of money would flow

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to consumers. Thus our troubles would be ended without abolishing the profit system, or money, or without adding to the government any functions different in kind from those it now exercises. As a kind of foreword to their stimulating little book entitled The Control of Wages, M r . Walton Hamilton and M r . Stacy May have inserted a paragraph from Francis Hackett's Ireland, in which he says: I believe in materialism. I believe in all the proceeds of a healthy materialism, good cooking, dry houses, dry feet, sewers, drain pipes, hot water . . . long vacations away from the village pump, new ideas . . . operas, orchestras, bands,—I believe in them for everybody. T h e man who dies without knowing these things may be as exquisite as a saint, and as rich as a poet; but it is in spite o f , not because o f , his deprivation.

They then go on to make clear the great importance of wages, if culture is to be democratic, because it is through the pay envelope that the great majority of American people share in the national income, and through it have access to the "fullness of life." T o the man whose pay comes in an envelope, the one to whom the little book is primarily addressed, they offer a new approach to his problem, for they tell him that though most of us have been fooled into thinking that there is a "natural law" by which wages are fixed, although we may have been impressed by talk about a "wages fund," by "productivity" and other abstractions, the plain fact is that wages are the "products of human arrangements," that "their sources are in technique, management and organization." David Friday, in another small and readable book entitled Profits, Wages and Prices, reminded us that a

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valuable lesson learned from the war experience was the discovery that "it is possible to produce so that every class can have a decent standard of living." H e thinks that inspiring leadership can make the end felt as so desirable that the hope of attaining it would set free energies before released by patriotism, the lure of high profits and high wages. In the days of the old philanthropy, a good job was done when a benevolent employer was found who would take on a client out of work, even though there was no real need of his services. Today it should be possible to admire the generosity and good will of a man who will run his mill at a loss rather than have his employees out of work and at the same time remain perfectly clearsighted about the futility of such a procedure as a real way out. The lesser and the more immediate needs should not blind us to the importance of persistent effort to gain a larger measure of economic security and independence for everybody. One part of this effort is to show up the social cost of the arrangements which permit so slight a hold on jobs for so large a proportion of those who work. In a general way, we accept economic insecurity as the explanation of the greater part of social maladjustment, yet fail to see how far-reaching is the result of the loss of a job or the uncertainty as to how long it may be held. Shifts in the bargaining power of whole occupation groups are constantly taking place, changes which are not likely to be accomplished without serious disturbance of carefully made plans for making a living with all that the term should hold. For economic independence is not synon-

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ymous with a sufficiency of physical things; it is derived from the capacity to work and the possession of bargaining power sufficient to secure in return for services rendered what is necessary for an increasingly satisfying standard of life.

V E C O N O M I C

M Y T H S

M Y T H S IN P R I M I T I V E L I F E

Myths have always been resorted to for explanation of economic phenomena. As we come to know primitive peoples, we discover the myths by which they account for the prescribed ways in which they carry on the daily round of their existence. Similarly, we read classic literature and delight in the myths elaborated to explain the customs of ancient societies. But it does not occur to us that our own explanations of the economic activities of today are built upon myths. W e naively assume that, since we belong to a modern sophisticated society, we have long ago substituted scientific principles for myths and that, unless it be in connection with our religious and aesthetic experiences, we reject myths in our interpretations. Y e t it should be clear that a myth does not really become something else by the simple device of calling it a "natural l a w " and we do in fact still retain a fairly extensive economic mythology. A myth is believed. Durkheim 1 distinguishes myths from fables, which are not believed, at least not in the same literal way. Malinowski 2 speaks of myths as "stories told with a serious purpose in explanation of 1Emile

Durkheim, The Elementary Forms of Religious Life, London, n. d., p. 83. 'Bronislaw M a l i n o w s k i , Sex and Suppression in Savage Society, N e w Y o r k , 1 9 2 7 , p. 108.

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things, institutions, and customs." The literature of anthropology abounds with myths which make clear just how the traditional methods of agriculture, handicraft and barter first came about and why they must be continued. An example may be found in the refusal of the Menomini, an Indian tribe of Wisconsin, to sow wild rice, as do their brothers, the Obija, although this crop is a very important staple for them and their tribal name is derived from it. It appears that3 while the young tribe lived on Menominee river, the boundary between the upper peninsula of Michigan and Wisconsin, Ma'nabusch, half-man, half-god mythic creation of the tribe, gave to them the extensive fields of wild rice along Menominee river and told them that they would always have the grain. T h e tribe has moved twice during historic time—first to the vicinity of Lake Winnebago, Wisconsin, and then to their present reservation north of the lake. They claim never to have sown the grain, because, they say, if Ma'nabusch wanted them to have it, he would provide it.

The Hawaiian fisherman plants stones in the sea in order that fish may be more abundant. They swarm about the stone as a magnet and this is because4 Kuula, the famous patron of the fishing industry in Hawaii, was a stone. T h e legend relating to him states that he was a fisherman of Maui, who was killed when falsely accused of insult by King Kahoalii. After his death Kuula assumed a "fish body" and later apparently he turned into a stone. Kuula's wife, Hina, and his son, Aiai, also turned into stone "fish gods." Of Hina, it is aid that she is "a real stone, which exists to this day," controlling certain kinds of fish. '"Faith as A Factor in the Economic L i f e of the Amerind," by A . E . Kenks. Quoted from The American Anthropologist, N . S. Vol. 2 ( 1 9 0 0 ) , by C. M . Case in his Outlines of Introductory Sociology, N e w York, 1 9 2 4 , c. p. 307. 4 E. S. C. Handy, Polynesian Religion. Publication No. 1 2 of the Bayard Dominik Expedition, Bernice P . Bishop Museum, Bulletin No. 34, 1 9 2 7 .

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T h e Zuni Indians obtain the necessary rain for agriculture by means of an elaborate ritual during which a great volume of smoke is produced. This is to protect and mask the departed dead, the uwannami, who are the rain makers. These shadow people collect water in vases and gourds from the six great waters of the world. From these waters, steam arises which wafts the shadows to the upper plane provided they are supplied with breath plumes. Each uwannami grasps a bunch of these plumes and arises to the upper plain from which he pours down water through the clouds according to the supplication of the Zuni. But the uwannami must be protected from the sight of the people by the clouds and smoke and "the greater the smoke offering, the greater the inducement for the rainmakers to work.'" The elaborate ceremonial of the Cheyenne Sun Dance, lasting many days, has for the tribe the significance of making their economic activities successful. Dorsey says:® T h e performance of the ceremony is supposed to recreate, to reform, to re-animate the earth, vegetation, animal l i f e , etc.; hence it would not be inappropriate to speak of the Sun Dance as the ceremony o f rebirth or o f the renaissance.

In such fashion, we see the economic life of the primitives guided by myths, which explain the reasons for doing many things in particular ways. Any other way than the one prescribed by the myth would certainly be attended by failure. The method is not derived by ' M . G. Stevenson, " T h e Zuni Indians," T h e Bureau of American Ethnology, Twenty-third Annual Report (1904), pp. 20, ZI. *C. A . Dorsey, The Cheyenne. Vol. 2. Field Columbian Museum, Publication 103, Chicago, 1905.

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experiment, it is not the result of trial and error j it is determined by a belief, the origin of which is purely mythical. I want to raise the question as to whether much of our own economic behavior is not, in point of fact, determined in the same way. We are under the same necessity to explain our environment, we have to start out with certain assumptions about it, around these habit and custom collect and make any further questioning unnecessary, although the myth itself may take the form of an elaborate piece of reasoning. T H E M Y T H T H A T W E A L T H IS G O L D

Economics has sometimes been defined as "the science of wealth." A myth older than this study is to the effect that wealth is gold. King Midas thought so and at first counted himself fortunate in the gift of Dionysus, which turned into gold all that he touched, even his little daughter, so that finally his mind was otherwise. And the alchemists believed the myth. Many lives were spent in the attempt to turn the baser metals into gold. Had they succeeded, their plight would have been similar to that of King Midas. The Spaniards' age-long quest of El Dorado was in obedience to the myth. And when they found gold in the Americas, they suffered from too rapid enrichment and the inflation of their money. Mercantilism was founded on this myth. First advocated in the Middle Ages, it had developed into a great system by the seventeenth century. National states determined their policies so that large hordes of precious metal should be

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in the public treasuries and in the hands of their citizens, and a "favorable balance of trade" secured through a flow of gold into the country. But we have lived to see our own country at a disadvantage because too much gold was flowing in. At last we have been influenced by what the economists call "the quantity theory of money." The Federal Reserve system may operate to restrict the amount of money in circulation, in its control of notes supported by gold reserves. T H E M Y T H

OF T H E E C O N O M I C

MAN

The myth of the economic man was one of the cornerstones on which the classical economists built the imposing edifice of their theory. This is the belief that a man will always act from motives of material self-interest. Nassau William Senior, writing in 1836, said that this proposition was7 the cornerstone o f the doctrine o f wages and profits and generally speaking o f exchange. In short it is in Political E c o n o m y what gravitation is in physics, the ultimate f a c t beyond w h i c h reasoning cannot go and o f w h i c h almost every other proposition is merely an illustration.

But physics still has gravitation to rest upon and modern psychology has blown the economic man into very thin air. As Mr. Soule has said:8 T h e 'economic man' is not the counterpart of the apple in a vacuum. Doubtless there are innate and unchangeable determinants o f human nature, but modern psychology, biology, and anthropology have shown T N. W . Senior, Political Economy, London, 1854, p. 28. '"Economics—Science and Art," by George Soule in The Trend of Economics, ed. by R . G. Tug-well, New York, 1924.

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us that such universal qualities make up a f a r smaller part o f human behavior than they do of the behavior of f a l l i n g apples. W e are not even yet sure what the so-called instincts are.

In other words, we understand today that no one set of motives determines behavior. A man may be a bricklayer and as a wage earner in that trade he is impelled to lay bricks that he may receive his wage. But simultaneously he is a member of the Republican Party, a "hard-shell" Baptist, and the father of a family of five. His fellow bricklayer may be a Democrat, a Catholic, and a widower, and the manner of laying bricks is usually precisely the same in the two cases. Yet a political, religious or family motive might at any time overturn the customary economic behavior of either. Men refuse higher wages to stay in a neighborhood that is well-known, they refuse to drive a hard bargain with a man who is down on his luck. T H E

M Y T H

OF LAISSEZ

FAIRE

Closely connected with the myth of the economic man is the myth of individualism and the policy of noninterference by the government in any business or trade. This we call laissez faire. It came with the industrial revolution as a reaction to the extreme regulation by the privileged guilds and corporations and the state itself. John Maynard Keynes traced the life history of this myth in the Sidney Ball Lecture at Oxford in 1924. He confers very distinguished parentage upon it, in the following words:8 °J. M . Keynes, The End of Laissez-Faire,

London, 1926, pp. 6, 7.

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At the end of the seventeenth century the divine right of monarchs gave place to Natural Liberty and to the Compact. . . . Fifty yean later the divine origin and absolute voice of doty gave place to the calculations of Utility. In the hands of Locke and Hume these doctrines founded Individualism. . . . They furnished a satisfactory intellectual foundation to the rights of property and the liberty of the individual to do what he liked with himself and with his own.

He goes on to show its development at the hands of the philosophers until : 10 T o the philosophical doctrine that Government has no right to interfere, and the divine miracle that it has no need to interfere, there is added a scientific proof that its interference is inexpedient.

Then came a bolstering up of laissez faire from a new quarter: 11 The economists were teaching that wealth, commerce and machinery were the children of free competition—that free competition built London. But the Darwinians could go one better than that—free competition had built man. . . . T h e principle of the Survival of the Fittest could be regarded as a vast generalization of the Ricardian economics.

Adam Smith, the father of political economy, saw behind the unwitting acts of the individual following his own interest, an actual providential guidance. In describing this activity, he said" He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own "Op. cit., p. i i . " O f . cit., pp. 1 3 , 1 4 . u

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of

Nations,

(quoted from the edition published by Dutton, Everyman's Library), New York, 1920, p. 400.

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security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases led by an invisible hand to •promote an end which was not fart of his intention.

In spite of its ancient and honorable lineage, the economists have renounced the enticingly simple and beautiful theory that laissez faire is the path to universal welfare. This was because the tragic effects of its operation were forced upon their attention. They observed the complications which must be taken into account when we come to deal with large units of production, when production is a prolonged process, and when a monopoly disturbs the balance of bargaining power. But renunciation by the economists did not affect the surrender of laissez faire as a sanction for the operation of business. It clung with a death grip. At last the wastes of the new factory system in England were found to be too costly to endure and laws were passed to protect the workers from its unrestricted operation. The passing of a myth in one part of the world, however, is no indication for giving it up in another, and what is now forbidden in England is still practised in China. In a memorandum of the Cotton Yarn Association issued October, 1928, information is given regarding the English factories in China running on two twelve-hour shifts and factories in Shanghai with fourteen and a half percent of their labor children under twelve years of age." " C o t t o n Y a r n Association, Limited, Statistical chester, October, 1928.

Information

Concerning

Man-

ECONOMIC

94 T H E

MYTHS

M Y T H OF T H E LABOR T H E O R Y OF

VALUE

Perhaps the most searching question which the economist has tried to answer, is the one which asks how value is conferred upon anything for which a price is paid. T o many great minds the answer which seems obvious, reasonable and right, is that in the long run the value of anything is measured by the amount of labor which has been expended on it. Adam Smith said: " I t is natural that what is usually the produce of two days' labor or two hours' labor should be worth double what is usually the produce of one day's or one hour's labor." David Ricardo said that labor was "the foundation of all value." H e accounted for the relative values of commodities as "almost exclusively" determined by the relative quantity of labor which had produced them. Another illustrious supporter of this theory was Karl Marx. Many projects have been launched on its assumed validity. One of the best known is the National Equitable Labour Exchange, which was opened by Robert Owen in Gray's Inn Road in London in 1832. T o this central bazaar, members brought goods they had made and received for them labor notes indicating the number of hours which had been expended in their manufacture. T h e notes read: "Deliver to the bearer exchange stores to the value of ( ) hours." Those receiving the notes could then buy any article which had required the same number of hours to make. Profit was to disappear automatically. Dominated by the personality and enthusiasm of Robert Owen, the enterprise started off auspiciously. It is related that: 14 "Frank Podmore, Robert Owen, A Biography. New York, n.d. pp. 408, 409.

ECONOMIC

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95

T h e deposits in the first f e w days were extraordinarily numerous, so much so that the pavement was blocked; and the stores became so congested that on the Thursday it became necessary to close the Exchange to the public f o r three days, to admit of the goods already deposited being properly arranged and priced. . . . So confident were Owen and his followers of the triumphant success of the experiment that on September 24th a week after the opening, Owen, addressing a crowded meeting of the 'unproductive industrious' classes—i. e. the shopkeepers and distributers generally—informed them that the Equitable Exchange would form a bridge over which society would pass from the present to another and better state of things; and warned them to come over before it was too late.

They did come over, but not in the manner Owen anticipated. It transpired that goods which had taken the same number of hours to make were not in equal demand. Shopkeepers advertised that they would accept the labor notes in exchange for their merchandise. These they took to the Exchange and soon emptied it of all that was marketable. After they had stocked their own stores very cheaply they refused to take more notes. The Exchange, soon unable to meet its obligations, was obliged to close its doors. The myth breaks down altogether as an explanation of actual and existing values. The desire or demand for goods is not necessarily related to the labor which has been expended upon them. Moreover, no matter how eagerly the first goods were bought, as they were brought in larger and larger number to the market, they found fewer and less eager buyers. The labor theory of value is swallowed up in another myth which we call the law of diminishing returns.

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96

MYTHS

T H E M Y T H OF T H E W A G E S F U N D

T h e theory that wages are paid from a fixed fund has had some illustrious supporters. It is pointed out that in our roundabout attenuated system of production, the wage-earners receive their pay long before the goods they make are finished and sold. They receive wages from a sum advanced by capital for this purpose, but as capital is at any time limited, and as the amount they could subtract from profits is limited, wages can not rise indefinitely, but are limited by the wages fund. Any increase which one group of workers get can be secured only at the expense of another group. The theory was first stated by Mai thus in 1798 It may at first appear strange, but I believe it to be true, that I cannot by means o f money raise the condition o f a poor man, and enable him to live much better than he d i d before without proportionately depressing others in the same class. . . . But i f I o n l y give him money, supposing the produce o f the country to remain the same, I give h i m a title to a larger share o f that produce than f o r m e r l y , which shows he cannot receive without diminishing the share o f others.

John Stuart Mill made some modifications of Malthus' position. H e comes to the conclusion that all trade unions are futile, although he holds that they should not be denied the right to attempt to raise wages, even though the attempt must inevitably fail. 16 "Thomas Malthus, Essay on the Principles of Population, London, 1926, Bk. III. Ch. 5, pp. 333-34M

J. S. Mill, Principles of Political Economy, ed. by W. J., London, 1909, pp. 934,

93S-

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97

I f it were possible for the working classes, by combinations among themselves, to raise or keep up the general rate of wages, it needs hardly be said that this would be a thing not to be punished, but to be welcomed and rejoiced at. Unfortunately the effect is quite beyond attainment by such means. . . . I f there had been no combinations in particular trades, and the wages of those trades had never been kept above the common level, there is no reason to suppose that the common level would have been at all higher than it is now.

And so throughout the first three-quarters of the nineteenth century, with more sharpness than characterized Mill, the weight of the objections of the theoretical economists was turned against the efforts of the trade unionists, and the effect of these objections is still felt although the sources of wages are now seen not to be limited to a wages fund. T H E M Y T H T H A T A L A B O R RESERVE I s NECESSARY

For a long time it was supposed that industry depended on the existence of a reserve supply which could be drawn upon for expansion when conditions favored expansion. This made permanent unemployment appear as a necessary concomitant of the conduct of industry. The accomplishments of management during the War, when there was actual shortage, has damaged this point of view. The swing is now all in the direction of stabilization of employment in order to avoid the high cost of labor turnover. M Y T H OF T H E I R O N L A W OF W A G E S

The iron law of wages, or the "brazen law" as Lassalle called it, is the most dismal of all the economic myths.

98

ECONOMIC

MYTHS

It is the contention that wages will always tend to fall to the point where they will be just sufficient to keep the worker alive. As soon as they rise above this point the population will increase and competition f o r the additional laborers will press wages down to the subsistence level. Thus the worker is at the mercy of causes over which he has no control. Gide, picturing him as the creature of this assumption, says:" H e is at the mercy of a fatalistic law, and is as helpless to influence his market as a bale of cotton. A n d not only is the law independent of him, but no intervention, legal or otherwise, no institution, no system, can alter this state of things.

That is, no charity can help him, no dole awarded by the state, for receiving these he would merely be ready to work for even lower wages and his income would not have been increased by it. No wonder the liberty-loving Mill who "formulated the law with greater rigor than any of his predecessors," found himself alarmed at its consequences. Karl Marx, who also propounded the law, was less downcast by it, for from it is derived the theory of surplus value which "is the backbone of the social revolution." The Communist Manifesto contends: T h e average price of wage-labor is the minimum wage, i. e. that quantum of the means of subsistence, which is absolutely requisite to keep the laborer in bare existence as a laborer. What, therefore, the wage-laborer appropriates by means of his labor, merely suffices to prolong and reproduce a bare existence. "Charles Gide and Charles Ri»t, A History n.d., p. 3 6 1 .

of Economic

Doctrines,

New York,

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T h e acceptance of this abstract doctrine has not been limited to theoretical writers and revolutionaries. Henry Clay points out that the Royal Commission which reported the reform of the English Poor Law in 1834 was committed to it and presented evidence of subsidies from the public treasury which had depressed wages." It has long been widely used for the purpose of keeping labor in active enmity with capital. T h e obstacle in the way of accepting the theory today is the actual course of wages and the birth rate. Wages have risen and simultaneously birth rates in many western countries have fallen. T H E M Y T H OF T H E GENERAL STRIKE

T h e myth which has almost epic significance is the myth of the general strike. Although it has been, and is, widely believed in Italy, Sweden, England, the United States, and other countries, it is essentially of French origin and partakes of characteristics which appeal with great force to the French workingman. Its adherents have included intellectuals of undoubted brilliance, notably Sorel, and active revolutionaries in great number. T h e general strike is the central instrument of the class war, it marks the day of judgment which shall see the overthrow of capitalism and the passing of the means of production over to the workers. In the words of Lagardelle: 1 ' " H e n r y Clay, Economics for the General Reader, New York, 1918, p. 190. "Quoted by J. A . Ettey in Revolutionary Syndicalism, London, 1913, pp. 91, 92, from Lagardelle, Syndicalism et socialism, 1908.

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MYTHS

T h e idea of a sudden amplification of this daily act which we call the strike, naturally finds a place in the working class mind. For the worker here is something tangible, real, which not only does not transcend the familiar setting of his l i f e , but which is his very l i f e itself. T h e r e is no need of wide theoretic speculations to teach him the effect of a generalized and simultaneous suspension of labor. H e has only by a natural operation of the mind, to multiply the consequences of particular incidents in the daily struggle to realize that in a single moment, by the sole power of concentrated efforts, the social war may attain its maximum intensity and the consummation be achieved.

Sorel himself calls the general strike a social myth, which he defines as a "mixture of fact and art for the purpose of giving an aspect of reality to the hopes on which present conduct rests." H e likens the general strike to the catastrophic revolution of Marx and the Christian idea of battle against Satan.20 In this connection M r . Estey reminds us that "great triumphs have been won for Christianity under the stimulus of a supposed war against the forces of evil, but men do not on that account necessarily believe in a personal devil. . . . And so with the Marxian catastrophe and the notion of a revolutionary general strike. T h e y represent convenient abstractions, handy summaries, containing the essence of all socialistic practice; but they must never be conceived as events which in the course of time will actually take place. A general strike of laborers in one simultaneous movement is impossible, b u t . . . it affords a most useful slogan in the class war.21 Regarded as a myth, Sorel points out the general strike as having a further " G . Sorel, Reflexions " E s t e y , op. cit., p. 9 1 .

stir la violence,

Paris, 1910, p. 27.

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MYTHS

101

advantage in that "when one takes one's stand on the ground of myths, one is proof against all refutation." H e claims that, attended with appropriate propaganda, the idea of the general strike calls forth the "most noble, the most profound, the most stimulating sentiments" and brings them to "their maximum intensity." " T h e idea of the general strike, constantly rejuvenated by the sentiments which proletarian violence provokes, produces an almost epic state of mind."22

R O L E P L A Y E D BY T H E M Y T H IN T H E H I S T O R Y O F ORGANIZED LABOR

The use of the general strike as part of an actual program has been discussed by socialist and labor groups for more than half a century. At the Geneva Congress of the International Working Mens' Association in 1866 it was contended that if a universal simultaneous cessation of work could be effected it would end in a "cataclysm in which society would be re-born." In 1872, the Belgian Internationalists invited their colleagues to adopt measures preparatory to a general strike, but the Congress declined because it was felt that more organization was necessary as a preliminary step. In England during the period of Robert Owen's activities, from 1828 to 1835, the idea of a general strike was widely discussed and to a slight extent experimented with, but it is from the French intellectuals, and the French working class leaders, that the general strike has had the major attention. " G . Sorel, op. cit., pp. 168, 364.

I02

ECONOMIC

MYTHS

Curiously enough, to Mirabeau is ascribed the first mention of the general strike, when in his warning to the ruling class he said: "Take care! Do not irritate this people that produces everything, and that to make itself formidable, has only to become motionless." In the late sixties the French leaders adopted the idea with zeal but the suppressive measures following the Commune in 1871 required a complete change of method. In 1888, the French Confederation of Trade Unions passed a resolution in favor of the general strike, and defined it as "the complete stoppage of all work," and this was followed by actual agitation in favor of it. The French workers found the idea appealing. They preferred a "short, sharp combat to the long-continued efforts and continued subscriptions to trade unions." Their experiments ended in failures. This was the case in the French mining strike in 1902, for which careful preparations had been made, of the general strike for the eight-hour day called by the Confédération Général du Travail, in 1906, the postal workers' strike in 1909, and the railway workers' strike in 1910. The last was put down by Aristide Briand, who had earlier claimed the title of the father of the general strike. In all these and others, there is to be found accumulating evidence that "the insuperable, damning facts are that the poorer classes will be the first to suffer, and the employers who might be vanquished if they were handled in succession, are stimulated to combine in firm resistance by a simultaneous joint attack."2' "L. L. Price in his "Introduction" to J . A. Estey5« Revolutionary SyndicaUim, London, 1913.

ECONOMIC

MYTHS

It might be said that the long series of Belgian general strikes, which had for their objective the extension of the suffrage, met with a measure of success, and so are an exception to the record of failures, but the wholly different nature of their aim makes them scarcely comparable. Two recent strikes of great importance add their testimony to the great difficulty of reaching the end by this method. The first of these, the Swedish general strike of 1909, made clear the ability of the bourgeoisie to take care of itself to an extent that had not been supposed possible. The other instance is the great British general strike of 1926. The question whether this last was, in fact, a general strike, since only the first line of workers was called out, is differently argued, but there is no difference of opinion possible regarding the actual collapse of the strike itself. M Y T H S AND S O C I A L PROGRESS

We have seen that we, no less than the primitives, resort to myths for guidance and interpretation when baffled by our economic activities. As we inspect the results of our reliance upon myths for this purpose, we must conclude that they do not point the path of social progress. If our efforts are to promote social progress, we shall have to renounce myths and travel by the more painstaking way of studying our own experience and learning from it. The domination of myth in our life today is scarcely suspected. We call the myths "laws" and so appear to have put them in a different category. The so-called law of supply and demand is supposed to rule our whole pro-

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cess of price fixing, yet an attempt even to formulate it will disclose the fact that the statement embodies only the most general tendencies and no measure of actual relationship between variables. Volumes have been written about the marginal buyer, yet he is not ticketed and it is impossible to catch him in the flesh, and not because he is hiding, for he too is completely unaware of his fundamental importance. No explanation of tomorrow's rent will be obtained from the most searching study of Ricardo. Our dependence on the outworn creed of a time outworn is so like the attempt of the lad in Stevenson's fable to free his people from superstition. It started from the practice of wearing a gyve on the right ankle. It became necessary to do heroic deeds to uproot this painful custom which kept the young from dancing and the people sick with running sores. To make it clear that it was a superstition and no command of Jupiter's, the young reformer had to brave the House of Eld, to heave the sword of heavenly forgery and smite his uncle, his father, and his mother. Yet these things he did, in spite of the love he bore them, for he judged their appearances sorcery and he would set the people free. But when he returned home it was to find his uncle smitten on the head, his father pierced through the heart, his mother cloven through the midst and all were dead indeed; so he went forth to see the folk who had been freed from the fetter, and it was a fact that they had no fetter on the right leg, but behold they had one upon the left, for it was, they told him, the new wear, as the old had been found to be a superstition!

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MYTHS

105

Similarly, we have many times surrendered one myth only to take another in its place. On the other hand, a great deal of useful information is being accumulated by the patient studying of economic institutions which have, for the most part, come into existence since the hallowed doctrine of the text books was formulated. These institutions are the starting points for the major undertakings of the economists today. W e believe that they constitute a more hopeful approach to the problems of our economic life.

VI T H E ECONOMIST'S OUTLOOK GROWING ZONES

Attention has already been called to the "growing edge between the unknown and the known" which constitutes the outer boundary of each science. This area extends beyond the main body of doctrine and established practice. Physics and chemistry and the other exact sciences have formulated their laws of cause and effect, but the explorations of their ablest thinkers are carried on in a region where problems are yet unsolved, where experiment is still the order of the day. The first announcement of the Forbes Lectureship expressed the hope that it would be possible to draw upon the specialized fields of the social sciences in such a way as to add to the skill of the social worker. For the realization of this hope, not a little depends upon where and how the fields are tapped. I believe it is the growing zone of economics, rather than the body of old doctrine, which contains the suggestions of most value for social work, and on this account I shall attempt to show something of the economist's outlook at the present time. From many other points of view the older positions are of real value, for the dialectic has been in the hands of some very able men; yet the theories of yesterday have been largely discredited as a means of understanding the problems of today and as a guide in controlling the economic organization of society.

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107

Changes in the economist's method of going to work may be seen in the ways he now chooses to introduce his field to the new student. A striking contrast exists between the textbooks of a generation ago and those in use today. Twenty-five or thirty years ago, the opening words of such texts had a uniformity which resembled the well worn pathway to the study of the Gallic Wars. They were: "Political Economy is divided into four parts: Production, Consumption, Distribution and Exchange." Today, we have textbooks entitled, "Problem Economics" and "Economic Problems," "Case Books" and "Economics for the General Reader," and "Economic Institutions." Later, the student goes on to read "Welfare Economics" and "Labor Economics" and a great many other kinds, in nearly all of which the traditional four parts are hard to find. Although the beginner is not released from the discipline of study of established principles, he is given an opportunity to understand these by watching his science grow. EMPHASIS U P O N T H E CHANGING ECONOMIC ORGANIZATION

It is the study of the changing economic organization itself, rather than the former philosophizings about it, that is determining the course of economic thought. As before intimated, we have learned to see many of the earlier explanations as themselves products of the economic strains of the age in which they were battered out. So today we turn to the study of economic history to find out, in the much quoted phrase of Professor James Harvey Robinson, "how did we get this way?" and where do

io8

THE ECONOMISTS

OUTLOOK

we go from here? Looking back has the advantage of permitting us to see the actual impact of competing groups without being blinded by the issues and interests which cause us to rationalize concerning the present. T h e new emphasis upon analysis of actual situations has left very little room for resort to the hypothetical cases so much employed earlier. When Ricardo discussed the effect of the durability of capital upon value and cost in 1817, he began in this fashion: 1 I f I had a machine worth £20,000, which with very little labor was efficient to the production of commodities, and if the wear and tear o f such machine were of trifling amount, and the general rate of profit 1 0 % , I should not require more than £2,000 to be added to the price of the goods.

In short, he conjured up the whole thing with no setting whatever, said never a word about what kind of machine or industry his illustration employed, made no connection whatever with the actual world of business. It would be hard to find such a detached instance in the writings of an economist today. I f , for instance, you turn to examine the methods of Professor J. M . Clark, when he sets out to demonstrate the Economics of Overhead Costs, you will find him making his points by resting them upon a minute analysis of particular costs in particular industries, using data from actual situations. In his presidential address before the American Economic Association in 1927, Professor T . S. Adams pointed out how we learn principle from practice. H e said:' 'David Ricardo, Principles of Political Economy and Taxation, (Geo. Bell), London, 1891. '"Ideals and Idealism in Taxation," by T . S. Adams in The American Economic Review, Vol. X V I I I (March, 1928), p. 1.

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OUTLOOK

109

For every sound principle of taxation laid down by the economist or statesman, the taxpayers themselves, in bitter struggle, have brought to light a half dozen. T h e intellectual interest of the aloof thinker is not enough. T h e creative inspiration of contest is also needed. Clashing litigants have made more good law than wise legislators and disinterested judges. T h e truth not only emerges f r o m contest, but the contest in part determines what is the truth. In this domain of life and thought, the facts are in some part what your own efforts make them. . . . Taxes are fixed much as wages are fixed by the play of competitive forces; but all sorts of collateral factors obscure the process, and the competitive efficiency of many groups is low. You can usually count on selfishness, but not always on enlightened selfishness. T h e interests or forces whose resultant the economist seeks to trace, vary with education, the progress of democracy, the acquisition of political finesse and tax technique on the part of the spokesman or representatives of such interests.

Professor Adams goes on to show us that out of these struggles emerges, not only the rule and the practice, but the group ethic. He says:8 T h e first impulse of a healthy human being, when threatened with a tax is to resist. But to resist successfully, the individual must work in and with a group; and insensibly the raw, egoistic impulse which first animated him is changed to a group impulse, which accepts group standards and a group ethic. Individual selfishness is profoundly modified by class selfishness, and in time the latter may, and often does, change to something higher. T h e guiding light frequently becomes social, or national, in its range. T h e greatest good of the greatest number replaces "my good, and that of my class." D I F F E R E N T STARTING POINTS

One of the most striking differences between the new economics and the old is in the initial assumptions made. "Adams, op. cit., p. 6.

THE ECONOMIST'S

OUTLOOK

The old, or so-called classical economics, systematized and formulated by Ricardo in the first quarter of the nineteenth century, dealt with human nature as something far simpler than modern psychology has shown it to be. The myth or bogy of "economic man" was the result of such mistaken assumption. In the second place, it took for granted that social arrangements, such as the position of the landed proprietors, had a permanency which time has proved to be false. The conclusions based on these incorrect assumptions have had to be discarded and the economist, with modern psychology as one of his tools, has started out afresh upon the task of studying human behavior in order that he may "show how men deal with each other in getting their livings.4 He studies this behavior in connection with the economic institutions by means of which economic life is carried on. Instead of drawing a picture of a completed equilibrium, he watches forces in motion and his study passes from statics to dynamics. For instance, he is enabled to see the importance of the role played by anticipation of the future, the mere prospect of good or bad times. Wages and prices may be seriously affected by calculations of what the weeks to come will bring. Indeed, forecasting services, affording a basis for knowing the business future ahead of time, have themselves become factors in modifying that future so that the forecaster has to make allowance in his prediction for the fact that the forecast will alter men's decisions. '"The Pro«pect» of Economic«," by Wesley Clair Mitchell, in The Tre»d Economics, ed. by R. C . Tugwell, New York, 1 9 1 4 , p. 16.

in

THE ECONOMISTS INSTITUTIONAL

OUTLOOK

111

ECONOMICS

T h e institutions which are the major concern of the economist today are: ( i ) money and price-fixingj ( 2 ) the apparatus of production, now become very highly mechanized^ ( 3 ) business enterprise in its most recent aspects; and ( 4 ) the underlying institution of private property, which gives protection to the interests of individuals who have "rights" in all these things. For the reason that he makes the functioning of these institutions the foundation of his study, this kind of economics is now called institutional economics T H E

SOCIAL

WORKER

AND

ECONOMIC

INSTITUTIONS

These same economic institutions constitute the field in which the tasks of the social worker lie. In order to help his clients make satisfactory adjustments to modern industrial life, it is necessary for him also to study them. For instance, he must know the changing hazards of machine technique and the psychic effects of repetitive jobs. Granted the machine is here to stay, the problem is to get its benefits of shorter hours and greater production without paying too great a price for them. Similarly, if the problem of maintaining a standard of living with fluctuating price levels is to be understood, the economic system itself must be probed. T h e realistic social worker will recognize in price regulation and credit 'This designation is used to suggest a point of view, which though prevalent today, is not universally held. For instance, Professor Allyn Young, whose brilliant career has just been brought to an untimely end by his death, probably wished to disassociate himself from the "Institutional economists." See his remarks in Chapter X I I of his Economic Problems, New and Old, New York, 1927.

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OUTLOOK

control, measures which go hand in hand with any adjustment an individual or family can make for the maintenance or improvement of a standard of living. For those who wish to escape social revolution it is not wise or safe to leave all the criticism of the institutions of private property and business enterprise to those who do want revolution. It is necessary to be informed about, and critical concerning, the changes which have already been made in these institutions. Within a generation, we have established inheritance and income taxes which have modified the rights in private property to a marked degree, but the soci^J interest in natural resources has remained largely unprotected. The time has passed for assuming that non-interference with the operation of a profit-making motive is a guarantee of national prosperity. In some of the public services we have already substituted production for use, in place of production for profit. We are on the threshold of further modification of the leeway given to business enterprise, but we lack the critical study of the experience we have accumulated which is necessary to make the next step successful. T H E I N T E R P L A Y OF E C O N O M I C INSTITUTIONS

We gave some attention to the interplay of these economic institutions in the discussion of bargaining power. We saw how purchasing power, which gives command over goods and services, determining the standard of living, increases and decreases with changes in the quantity of money, with the operation of the business cycle, with application of new techniques to production, and with changes in the character of the business unit.

THE ECONOMIST'S O UTLOOK

1i3

The economist believes that our chance to know more about the hazard of fortunes in our work-a-day world, depends upon our willingness and ability to make a thoroughgoing study of these institutions, to rid ourselves of all our preconceptions about them and ferret out what actually happens under their operation. We have had many unwarrantable assumptions about them. For instance, we find it very refreshing to have M r . Stuart Chase turn upside down nearly every generalization we have made about the effect of machines.® " M a chines make less work." Oh, no," says Mr. Chase, "they make more." And he proceeds to show us the enormous amount of work necessary to produce the many new machines and the raw materials which feed these machines. "Machines make skill unnecessary," we say. " N o , " says Mr. Chase. " A t the same time that they have made some old skills unnecessary they have introduced new skills hitherto unpractised, such as engine driving, chauffeuring, and motion picture work." "Machines make life monotonous," we conclude with the firm conviction. But, Mr. Chase tells us there is more monotony in the life of millions in China without machines than in the mechanized Occident, and a far lower standard of living. And then he chagrins us still farther by calling attention to a great danger in our machine age which we have scarcely thought of. This he calls the "tenuousness of our technical structure," the danger inherent in the fact that only a few individuals understand or could control the functioning of the vast system of interlocked mechanisms which supports modern urban life, a system so 'Stuart Chase, Men and Machine!, New York, 1929.

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interdependent that the cutting of a central nerve in transport or communication would make the whole structure crumble. N E W M E T H O D OF S T U D Y R E Q U I R E D BY N E W

SUBJECT

MATTER

Today, then, it is the behavior of men which is the subject matter of economics, the behavior of men as they move in the economic organization of society, as they use these economic institutions. But it is the mass behavior the economist studies. H e is therefore always under the necessity of putting the records of his observation in statistical form, and for this he has had to develop a new method of measurement. The need to perfect methods of quantitative measurement has been pointed out by Professor Mitchell as one of the outstanding lessons which economists learned from the War. It is not difficult to tell that results of a certain kind will follow a given action, that, for instance, an increase in the volume of goods produced will result from investing more capital in machines. But the modern executive must know exactly how much that increase will be and the unit cost required to make it. In speaking of the war planning, in which he had a responsible part, Mitchell says:T T h e important t h i n g was to find out in what order o f magnitude these consequences should be reckoned. turned on the questions: h o w many?

C o n t i n u a l l y grave decisions

h o w much?

how soon?

Say that

the l i m i t i n g factor o f our military effectiveness in France was s h i p s — ' " T h e Prospect* o f Economics,

Economic»," by W e s l e y C l a i r M i t c h e l l , in The

ed. by R. G . Tug-well, N e w Y o r k , 1924, pp. 26, 27.

Trend

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OUTLOOK

115

ships to carry troops and munitions. T h e n we should put all the available tonnage under army control. And it was wasteful to recruit and tram more soldiers or to make more materials within a given time than these available ships could carry. But how large a force would each thousand tons maintain in France and how many thousand tons were available for army use?

T h e W a r served to make the economist realize the difference between "the problems that crop up in real life from those which appear in books. T h e theorist, discoursing at large, may content himself with pointing out the kinds of causes and consequences to be considered} the practitioner, dealing with specific cases must calculate the magnitudes involved. In proportion as economists face real problems they will strive to cast even their general theory into the quantitative mold." For peace time needs require a quantitive analysis no less than those of war, and much of the war work threw new light on some of these.8 For example, to help the price-fixing authorities the Federal Trade Commission made careful and elaborate studies of the cost of producing staples like coal and iron in different plants. T h e i r figures gave clearer insight than we ever had before into one of the oldest topics of economic disputation.

W e have vastly extended and improved the amount and character of this social measuring since 1914. T h e Federal Reserve Board measures the fluctuations in credit, many organizations now exist merely to refine the measurement of business cycles, and industrial engineers are learning how to report on the physical productivity of labor. T h e recent measuring of production has done a great ' M i t c h e l l , op. tit., p. 28.

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deal to discredit the assumption that all that social welfare now requires is a more equitable system of distribution, that we have enough for all in our great national income, but it is unfairly shared. Professor Mitchell shows 9 that . . . recent studies of income not only make our present knowledge of the inequalities of income more precise, but also throw into high relief the inadequacy of the aggregate national income. It seems that even if the national income were divided equally among all inhabitants of our country—and our country has presumably the highest per capita income in the world—American families would still lack the means for a satisfactory life. . . . T h e fundamentally important problem is how to render production more efficient.

W e have let Professor Mitchell sum up the "prospects" as the economist sees them with emphasis on: ( i ) a shift away from a formulation of principles, and toward a study of human behavior as effecting, and affected by, economic institutions} and, ( 2 ) a perfecting of the technique of measuring economic phenomena. H e adds another point when he asserts that: ( 3 ) we are in sight of a new goal, the goal of social welfare. 10 In becoming a science of human behavior economics will lay less stress upon wealth and more stress upon welfare. Welfare will mean not merely an abundant supply of serviceable goods, but also a satisfactory working l i f e filled with interesting activities. T H E E C O N O M I S T S T A K E A C C O U N T OF T H E M S E L V E S

All these changes in method and aim have been the occasion of a number of attempts on the part of econ' M i t c h e l l , op. cil.,

29.

" M i t c h e l l , op. cit.y p. 2 9 .

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117

omists to formulate the present outlook of their subject. A group of recent books gives excellent indication of what has been going on. Among them is a volume which appeared under the editorship of Professor R. G. Tugwell, who called it a "manifesto of the younger generation." This was an effort to make evident the "renaissance of economic thought" which thirteen of the younger men felt was taking place, and which, in their several contributions, they set forth in The Trend of Economics published in 1924. It was followed in 1927 by Economic Essays, published in honor of John Bates Clark, dean of American economists. This tribute to the most distinguished member of the older order records the parting of the ways between the old and new interpretations. A full and useful account of "Recent Developments in Economics" was contributed by John Maurice Clark in the volume entitled Recent Develofments in the Social Sciences in the Lippincott Series (1927). Still another method of accomplishing a similar end was chosen by Professor P. T. Homan in his Contemporary Economic Thought (1928). He selected the five men whose combined influence he believes greater than that of any other five men writing today, and set forth their theories and commented upon them with great sympathy and discernment. Finally, a book of equal value for the purpose before us is one which was not addressed to economists at all, but to beginning students who seek an understanding of the system under which they live. This is Willard Thorp's little manual entitled Economic Institutions (1928). It is a remarkably clear and simple use of the new approach to the study of economics.

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SOCIAL

W O R K

In the meantime, social workers have been similarly explicit in formulating changes in aim and method. T h e scope of the profession has widened beyond limitations of the field generally accepted earlier. Only a dozen years ago, Miss Richmond pointed out that social work was destined "to become an adjunct in the fields of medicine, education, jurisprudence, and industry." 1 1 Since that time the leaders in all these fields have learned to depend on social workers for important contributions to their work. Perhaps the social worker has no less to gain than the economist in developing an awareness of the trend his work is taking. W h e n small sections of it are separately surveyed, social work is often foupd very discouraging. T h e new worker, who can see so little in the way of permanent accomplishment, sometimes becomes dissatisfied with his choice of professional work. H e may seek in vain, not only for proof of accomplishment, but also for satisfying definitions of the goals aimed for. His days, spent in reading case histories, can so easily give an impression of much slipping back and little done for keeps. A t one point the record may command his highest admiration because of the depth and delicacy of understanding with which the social worker has grasped his problem; it may contain proof that in a particular case the social worker has been a successful teacher, but the reader will remind himself that a similar expenditure of effort and money will have to be made repeatedly, since " M a r y E. Richmond, Social Diagnosis, New York, 1917, pp. 26, 27.

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119

nothing has been done to change the conditions out of which the particular maladjustment grew. A grasp of the long-time trend of the work is needed, not only for reassuring those taking part in it, but also for the service it can perform in planning the next steps. The economist, remembering what a profitable procedure it has been in his own case, recommends for this purpose a careful study of social and economic history. H e urges the social worker to study a particular country or community in order to see more clearly the course events have taken, and particularly the effects of remedial efforts employed. In order to do this, the social worker should be continually asking of succeeding periods such questions as the following: What were the causes of particular disabilities, as understood at the time and as seen in perspective? What responsibility was assumed for these disabilities? Who performed the social services at each stage and what was the terminology used? Public health administration has recently developed from medicine. A relation which makes possible the constant exchange of information > for coordination and control, exists between the practising physicians and the officials of the departments of public health. We have now established departments of public welfare, as well as departments of public health, but the scope of these is limited and there is no adequate machinery for making the wisdom which is the possession, of social workers bear fruit in our economic and political arrangements.

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We have yet to work out, not only a better relation between public administrative bodies and voluntary social agencies, but also better contacts between quasi-public bodies and social workers. In the preface of Social Diagnosis, Miss Richmond speaks of one of her forerunners as "a man of genius and vision who saw the need of liberating the powers of self-help and mutual help within the people themselves and who realized the part personal service might play in this task." I do not know whether Miss Richmond had in mind such means as trade unions, political organizations, and cooperative societies, but if self-help and economic security are goals, the social worker must have a sympathetic understanding of these collective efforts even if he does not give them active support. T H E CRITICISM OF SOCIAL LEGISLATION

More responsible parts in determining the social and economic policies of the state must certainly be taken in the future by both economists and social workers. Granted that as practitioner, the social worker may wish to limit his sphere of activity to the working out of adjustments within the immediate sphere of his clients' family, social, and occupational connections, it is still reasonable to expect from him in these end-processes of our social arrangements some word of enlightenment for their future modification. We should profit if, in addition to furnishing a description and analysis of the social problems facing the country, social workers assumed more professional responsibility for making known the actual

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121

effect of the existing social legislation. The reports of the administrative officers and boards do not bring out the actual social effects of such experiments as workmen's compensation, minimum wage laws, mothers' pensions and other aspects of social insurance. The social workers have often been those who effectively urged the enactment of such provisions. They have also been those with the best opportunities to see the actual results after their recommendations became law. It is therefore highly appropriate for them to make accessible their collective experience and judgment upon them. R E S E A R C H ON N E W

PROBLEMS

In view of the several recommendations and suggestions that have been made, it is in order to consider a particular application of some of them by way of illustration. Much of the social workers' information and advice are needed on problems long before they have reached the stage where legislation may appropriately be enacted. Such is the case, for example, with the new industrial migrant families whose plight has baffled many American communities. In an interesting report made to the National Conference of Social Work in 1925 a warning was sounded to the effect that these wandering families might "prove a national menace unless controlled." 12 Assuming that the National Conference had then accepted responsibility for the "menace," thus brought to its attention, let us consider what steps might have been taken. Suppose the matter had been first referred to a com""Automobile Migrants," by A . A . Buffington, in The Proceedings Conference of Social Work, Denver, 1925, p. 264.

o f the

National

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mittee with instructions to study all the information which family societies and other agencies had accumulated. The committee might have reported that the data were not sufficient to afford a basis for a final solution, that: ( I ) the migrant families constituted a national problem which would therefore require a national solution j (2) that part of that solution would be found in the origin of the migrant family, that we should have to place it in the right chapter of economic history; and ( 3 ) that the problem itself, its setting and its social cost, would have to be measured and its quantitative importance made clear. It would then have been necessary to undertake a study which would make possible answers to such questions as the following: What is a migrant family? How old is the present migration? What factors appeared in the social and economic life of the United States after 1900 which may have produced this particular family behavior? How do these families differ psychologically and economically from the pioneer migrants? How are they like them? Why is family migration associated with fruit and vegetable harvesting and not with wheat and other crops? What are the changes in the transportation system which make possible the transportation of fresh fruit, vegetables, and fish to a distant market? What are the new processes in canning and preserving which have called forth a new labor supply? Exactly what are the seasons for each crop? Most of these answers would call for careful statistics. The necessary data could not all be obtained from studies of the industries in which the migrants are em-

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ployed. They would also be concerned with irregularities of employment in other industries which make it necessary to move to find a job. In 1926, the 1,600 factories which report to the New York State Department of Labor gave work to over 31,000 more persons in March than in July, and in October, 1928, over 24,000 more than in the previous July. In 1928 there were nearly three times as many employed in canning and preserving in September as in January. A study of the change in the form of the business unit might be necessary for a complete unraveling of the problem. For instance, since this phenomenon first received attention, there has come about a complete change in the type of management which characterizes the planting and harvesting of tobacco. The domestic situation in which the employee was part of the household of the farmer has given over to employment under factory organization by a large corporation, and it is to be noted that such employment is not regulated in the same way by law as factory employment is. T o measure the problem, especially as it touches the employment of children, information would be needed regarding hours, pay, and conditions of work and living generally. The general social cost would have to be approximated in such things as absence from school, unsanitary and undesirable living arrangements, and the general breakdown of habits of settled living. I feel confident that such a report, accompanied by comprehensive information, statistically arranged to show the relations between the different factors involved, would have a good chance to influence a national employ-

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ment policy. Its recommendations could not be turned down without grave consideration. In any case, such an approach to such a problem offers more hope of satisfactory solution than several times the same amount of work on individual cases or separate communities. Its title to consideration would not be in a specific cure offered, but rather in the service done by making the problem stand out in relation to the whole social environment. Finally it is in order to confess that these attempts to explore the boundary lines between economics and social work have been a challenging experience to the present explorer. They have convinced her that when one looks at the field which has been one's particular preoccupation for a good many years and searches in it for what may be of use to workers with a different background and training and with different, but similar, objectives, a great deal is seen to which one has been blind before. However much or little my attempts have served to bring into relief important aspects of our living together which might otherwise have received too slight an emphasis from social workers, and whether or not there have been conveyed hints which may yield suggestion for method, the experience has revealed to me how much the economist owes to the social workers, who in all these years have so insistently called to our attention the human values which make for enduring welfare. I look forward hopefully to many joint projects which will be undertaken by economists and social workers. This hope is based on the evidences of growing similarity in methods and fundamental aims, which wait only clearer definition to make fuller cooperation possible.

BIBLIOGRAPHY

BIBLIOGRAPHY The ten titles listed under the heading of each of the lectures are those of the boob cited or suggested for further reading in the field. I. THE RATE OF ECONOMIC CHANGE B E N N E T T , ARNOLD, DAVIS, W I L L I A M S . ,

Clayhanger. New York, 1 9 1 0 . Life on a Mediaeval Barony. New York,

I923KELSO, ROBERT,

Boston, 1922. LYND, ROBERT

History of Public Poor Relief in Massachusetts. S. and

HELEN

M., Middletown. New York,

1929.

Buddenbrooks (translation). New York, 1 9 2 4 . F., Social Change with Respect to Culture and Original Nature. New York, 1922. P O W E R , E I L E E N E . , Mediaeval People. London, 1 9 2 4 . Q U E E N , S T U A R T A . , Social Work in the Light of History. Philadelphia, 1922. S I E G F R I E D , A N D R É , Post-War Britain (translation). London, M A N N , THOMAS,

OGBURN, WILLIAM

1924. U N D S E T , SIGRID,

The Axe (translation). New York,

1928.

II. THE MEASUREMENT OF ECONOMIC DATA Recent Economic Changes in the United States. New York, 1929. D O U G L A S , P A U L H . , Real Wages in the United States. Boston,

C O N F E R E N C E ON U N E M P L O Y M E N T ,

1930.

E. D A N A , American Industry and Commerce. New York, 1930. F L O R E N C E , P. S A R G A N T , The Statistical Method in Economics and Political Science. New York, 1929. DURAND,

BIBLIOGRAPHY

128

B., Juvenile Employment and Labor Mobility in the Business Cycle. Boston, 1927. Social Consequences of the Business Cycle. Boston, 1927. K I N G , W I L L F O R D I., The National Income and Its Purchasing Power. New York, 1930. Index Numbers Elucidated. New York, 1930. M I L L S , F R E D E R I C K E . , The Behavior of Prices. New York, 1927. M I T C H E L L , W E S L E Y C., Business Cycles, the Problem in Its Setting. New York, 1928.

HEXTER, MAURICE

III. W H A T CAN A C O M M U N I T Y AFFORD? R., Unemployment Insurance in Germany. Washington, 1929. C L A Y , H E N R Y , The Post-War Unemployment Problem. London, 1929. C L E V E L A N D , F R E D E R I C K A . and A R T H U R E . B U C K , The Budget and Responsible Government. New York, 1920. C O M S T O C K , A L Z A D A , Taxation in the Modern State. New York, 1929. D O U G L A S , P A U L H . and D O R O T H Y W., "What Can a Man A f ford?", Supplement No. 2, American Economic Review, Vol. X I , December, 1 9 2 1 . G I D E , C H A R L E S , Consumers' Cooperative Societies. New York, 1922. K I N G , W I L L F O R D I., Trends in Philanthropy. New York, 1928. L A U C K , W. J E T T , The New Industrial Revolution and Wages. New York, 1929. N A T I O N A L I N D U S T R I A L C O N F E R E N C E B O A R D , Cost of Living in Twelve Industrial Cities. New York, 1928. S E L L S , D O R O T H Y , The British Trade Boards System. London, 1923.

CARROLL, MOLLIE

IV. E C O N O M I C M Y T H S E M I L E , The Elementary Forms of the Religious L i f e (translation). New York, 1 9 1 5 .

DURKHEIM,

BIBLIOGRAPHY

129

J . A., Revolutionary Syndicalism. London, 1 9 1 3 . Economics and Human Behavior. New York, 1927. G I D E , C H A R L E S and C H A R L E S R I S T , A History of Economic Doctrines (translation). London, 1 9 1 5 . K E T N E S , J . M., The End of Laissez-Faire. London, 1927. M A L I N O W S K I , B R O N I S L A W , Myth in Primitive Psychology. New York, 1926. Sex and Suppression in Savage Society. New York, 1927. M A L T H U S , T H O M A S , Essay on the Principle of Population (first published 1798) with notes by James Bonar. London, 1926. P O D M O R E , F R A N K , Robert Owen, a Biography. New York, 1924. S M I T H , A D A M , An Inquiry into the Nature and Causes of the Wealth of Nations (first published in 1 7 7 6 ) . Everyman's Library. New York, 1 9 1 0 .

ESTEY,

F L O R E N C E , P . SARGANT,

V. B A R G A I N I N G POWER OF GROUPS A N D INDIVIDUALS E. M., Wages and the State. London, 1926. Men and Machines. New York, 1929. C L A Y , H E N R Y , Economics for the General Reader. New York, 1915. F O S T E R , W I L L I A M T . and W A D D I L L C A T C H I N C S , Profits. Boston, 1925. The Road to Plenty. Boston, 1928. F R I D A Y , D A V I D , Profits, Wages and Prices. New York, 1920. H A M I L T O N , W A L T O N H . and S T A C Y M A Y , Control of Wages. New York, 1923. L A U C K , W. J E T T , The New Industrial Revolution and Wages. New York, 1929. M A R S H A L L , A L F R E D , The Principles of Economics (first published 1890). 8th ed., New York, 1925. R I P L E Y , W I L L I A M Z., Main Street and Wall Street. Boston, 1927. BURNES,

CHASE, STUART,

BIBLIOGRAPHY

130

VI. T H E E C O N O M I S T ' S

OUTLOOK

A., ed., Whither Mankind? New York, 1 9 2 8 . C L A R K , JOHN M A U R I C E and others, Adam Smith, 1 7 7 6 - 1 9 2 6 , lectures to commemorate the sesqui-centennial of the publication of " T h e Wealth of Nations." Chicago, 1928. E C O N O M I C ESSAYS, Contributed in Honor of John Bates Clark. New York, 1927. H O M A N , P A U L , Contemporary Economic Thought. New York, BEARD, CHARLES

1928.

Principle» of Political Economy (first published 1848), Ed. by J . Ashley. London, 1909. P I G O U , A R T H U R C., T h e Economics of Welfare. London, 1 9 2 0 . Recent Developments in the Social Sciences. Philadelphia, 1927. SOULE, GEORGE, T h e Useful Art o f Economics. New York,

M I L L , JOHN S T U A R T ,

1929.

Economic Institutions. New York, 1 9 2 8 . TUGWELL, R. G., ed., T h e Trend in Economics. New York, THORP, WILLARD, 1924.

INDEX

INDEX Adams, T . S., 108, 109 American Economic Association, 76 American Federation of Labor, 73 Angell, President James Rowland, 2 Averages, 28 Bankers Trust Company, 73 Bank of England, 6 Bargaining power, 66, 6 7 ; of groups and individuals, 64-85; shifts in, 6 7 ; Trade Unions and, 72-74 Bennett, Arnold, 1 4 Bibliography, 1 2 7 Borderlines, 1-3 Briand, Aristide, 1 0 2 Budgeting and saving, 48 Business and social work, 5 8-61 Business cycle, 3 5 - 3 9 ; worker in, 74-77 Business management and credit, 68-71 Business units, social expenditures o f , 56 Capital, accumulation of new, 1 0 Catchings, Waddill, 82 Chase, Stuart, 2 1 , 1 1 3 Chaucer, 1 2 Cheney, Howell, 58-61 Cheney Brothers, 58-61 Cheyenne Indians, 88 Clark, John Bates, 1 1 7

Clark, John Maurice, 108, 1 1 7 Classical Economics, 1 1 0 Clay, Henry, 99 Community, what it should give, 46-63 Collins, Joseph D., I Confédération Général du Travail, 1 0 2 Copeland, Morris A., 34 Correlation, 29 Cotton Yarn Association, 93 Courtaulds, 6 Crescent Machine Works, 73 Crocker McElwain Paper Company, 57 Davis, William Stearns, 1 3 Douglas, Paul, 30, 3 1 , 33, 34 Durkheim, Emile, 86 Economic history: in novels, 1 3 1 4 ; reading o f , 1 1 - 1 3 Economic myths, 86-105 Economic organization, dominance o f , 64-65 Economist's outlook, 1 0 6 - 1 2 4 English industry and unemployment, 5 Estey, J . A., 99, 100 Family, size o f , 30, 3 1 Federal Reserve Board, 1 1 5 Foster, William Trufant, 8 i , 82 French Confederation of Trade 1 Unions, 1 0 2 Friday, David, 9, 1 0 , 83

134

INDEX

Germany, economic recovery o f , 8, 9 ; social work in, 1 9 , 20 Gide, Charles, 98 Grand National Consolidated Trades Union, 1 8 Growing zones, 1 - 3 , 1 0 6 , 1 0 7 Hamilton, Walton, 83 Health work, cost o f , 58-61 Hexter, Maurice, 36, 3 7 , 38 Hibbings, Minnesota, 57 Homan, P. T . , 1 1 7 Imperial Chemical Industries, 78 Income in the United States, 3435» 47-4» Index numbers, 28, 29 Industrial revolution, 1 6 Institute of Human Relations, 2 Institutional economics, i l l International Association of Machinists, 73 International Working Men's Association, 1 0 1 Iron law of wages, 97-99 Karelsen, E . A., 47 Kelso, Robert, 1 5 Keynes, John Maynard, 6, 91 King, W. I., 34, 5 3 , 54 Labor reserve myth, 97 Labor theory of value, 94-95 "Laissez f a i r e , " 9 1 - 9 3 Lancashire cotton, 5, 6, 61 Linton, Ralph, 65 Lynd, R. S., 1 4 Magic, role o f , 23 Malinowski, Bronislaw, 86

Malthus, Thomas, 96 Mann, Thomas, 1 3 Marco Polo, 1 2 Marshall, Archibald, 16 Marx, Karl, 94, 98, 1 0 0 Massachusetts Child Labor Committee, 38 May, Stacy, 83 Measurement of economic data, 23 Mechanized production, effects o f , 20-22, 1 1 3 , 1 1 4 Mekhett, Lord, 77, 78 Menomini Indians, 87 M i l l , John Stuart, 96, 98 Minimum wage, measurement of, 31-33 Mirabeau, 102 Mitchell, W. C., 36, 65, n o , 114, 116 Mond, Sir Alfred, 77 Mond Conferences, 77 Municipal spending, 52, 53 Myth of the general strike, 99103 Myths, see Economic myths Myths and social progress, 1 0 3 105 Myths in primitive l i f e , 86-89 National Bureau of Economic Research, 34, 53 National Conference of Social Work, 1 2 1 National Equitable Labour E x change, 94 National Industrial Conference Board, 60 National spending, 50 New Haven, 54, 55

INDEX N e w York Charity Organization Society, 4 1 Ogburn, W. F . , 1 0 O l d industries, 4-7 Owen, Robert, 1 7 , 1 8 , 94, 9 5 , 101 Poor Law Commission, Minority Report o f , 49 Power, Eileen, 1 2 Power, Mayor Vernon L . , 57 Pringle, J . C., 5 1 , 6 3 Progress, measurement o f , 25 Queen, S. A., 1 6 , 1 7 Rate of economic change, 1 - 2 2 Rationalization, 78 Rayon, 6 Real wages, movement o f , 3 3 - 3 4 Record keeping, 39-40 Ricardo, David, 108, n o Richmond, Mary E., 1 1 8 , 1 2 0 Ripley, W. Z . , 69, 70, 7 1 Robinson, James Harvey, 107 Russia, 1 0 Sackett, Francis, 83 Sadler, M . T . , 1 7 Savings, 9, 1 0 Senior, Nassau William, 90 Shaftesbury, Earl o f , 1 7 , 18 Smith, Adam, 92 Smith, Jeremiah, 9 Social agencies, apportionment of funds o f , 55-56 Social work, funds for, 52-54, 6 1 - 6 2 ; source of contributions to. 54. 55

135

Solomon, Alice, 1 9 , 20 Sorel, G . , 99, 1 0 0 Soule, George, 90 Spending and social welfare, 5 1 , 52

.

Spending by social agencies, 5 3 , 54 Statistical questions, 27 Statistics, role o f , 24-25, 40-45 Stevenson, R . L., 104 Sun dance, 88 Tanalas, T h e , 65 Thorp, Willard, 1 1 7 Trade Union Congress, 79 Tugwell, R . G . , 90, 1 1 7 Undset, Sigrid, 1 4 Unemployment, 5, 44, 56, 74, 75, 123, 124 Vested interests, 7 Wage bargain, peculiarities of the, 67 Wage-earner and concentration of capital, 7 1 , 72 Wages and the size of families, 80, 81 "Wealth is gold," 89 Webb, Sidney and Beatrice, 18 What can a community afford? 46-63 White, Mrs. Eva Whiting, 3 Wilson, Woodrow, 69, 70, 7 1 Young, Allyn, 1 1 1 Zuni Indians, T h e , 64, 88

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