Confessions of an Economic Heretic/Chapter 5
CHAPTER V
SOUTH AFRICAN AND AMERICAN STUDIES
The Boer War was both a turning-point in my career and an illumination to my understanding of the real relations between economics and politics which were to occupy so large a place in my future work. The persistent opportunist pressures by which our widespread Empire had grown up and the relative parts played in the process by political ambitions and commercial gains had become a matter of close attention since Lord Beaconsfield had organized the Prince of Wales’s visit to India and had staged the magnificent imperial parades at Queen Victoria’s two Jubilees. The conscious pride in our Empire had become a new and potent factor in our national sentiment and was beginning to evoke some envy and criticism in foreign quarters. Mark Twain, watching the Jubilee procession, remarked that “The English are mentioned in Holy Scripture — ‘Blessed are the meek for they shall inherit the earth.’” So long as our colonial possessions, a quarter of the globe, were free to the trade and the migration of other nations, no active sense of grievance was evoked. But when Joseph Chamberlain set out to convert the Empire into a close preserve by his policy of tariffs and preferences, and the magnificent projects of Cecil Rhodes began to influence the mind and language of English politicians, the larger significance of our Imperialism became manifest. The procedure was unhappily dramatized in the Jameson raid and in the revelations of our public inquiry which indicated the connivance of important British Statesmen in this attempt at forcible aggression. The outbreak of the Boer War in 1899 will, however, rank in history as the simplest and plainest example of the interplay of political and economic motives in Imperialism. For the political ambitions of Chamberlain, Milner, and Rhodes were consciously and skilfully utilized by the mine-owners of the Rand for their purpose of profitable control. The mixed Outlanders in the Transvaal demanded that British force should be applied, so as to relieve them from the taxation and other interferences of the Kruger government, and put them in the necessary political control of the country.
What was my particular personal concern in this affair? I happened to have written in the Contemporary Review of March 1899 an article on “Imperialism,” containing some references to the recent history of South Africa, which came before the eyes of L. T. Hobhouse, then the chief political leader-writer for the Manchester Guardian. Hobhouse, destined to become one of my closest friends and associates in many other projects, urged his Editor, C. P. Scott, to send me out on a voyage of political inquiry to South Africa when the outlook began to be dangerous. Though I had had no experience in newspaper work, except as an occasional reviewer, I seized the opportunity to see the working of Imperialism at close quarters, and after several talks with Scott and Hobhouse launched upon what was for me a novel adventure. I met and talked with all the leading public men, Kruger, Reitz, Smuts, and Hertzog in the Transvaal and the Free State; Milner, Schreiner, Merriman, Sauer, Hofmeyr, at the Cape; I dined with Rhodes at Groot Schuur on the eve of the outbreak of war, and busied myself to learn all I could about the division between Dutch and British sentiments in the Colony. While Milner told me that it was necessary “to break the dominion of Africanderdom,” Rhodes professed to disbelieve in the Boers’ willingness to fight, and even when the war began the situation in Cape Colony remained for some time doubtful. The lesson I learned from this experience was the dominant power of a particularly crude form of capitalism operating in a mixed political field. It became evident that, while the politicians were hesitant and divided, the capitalists of the Rand were planning straight for war and were using the British Press of South Africa as their instrument for rousing the war-spirit in England. Though the large number of interested English investors in South African mines formed the nucleus of their appeal, they were well aware that England would need to visualize the war in terms of morals and humanity. So for some months their Press was turned upon outrages upon Outlanders in Johannesburg, while missionary opinion was mobilized to denounce the cruelties practised by the Boers upon the native population in South Africa. The diplomatic story of Outlander grievances, foisted on our public from diplomatic sources, was wildly exaggerated. Living for several weeks in Johannesburg at the very time of these alleged disorders, I experienced no personal difficulties and, though the timidest of God’s creatures, I felt no fear in moving about the streets at night. Though a few acts of violence were committed, there was no campaign of violence, and it became clear to me that, if Smuts and Schreiner had had the conduct of the Bloemfontein Conference in their hands, instead of Kruger and Milner, there would have been no war, in spite of the goadings of a “kept” Press. War came from the joint drive of capitalism in South Africa and the new imperialism in England.
This experience had two effects upon my life. It gave realistic support to economic opinions derived in the main from theoretic interpretations of history, and it plunged me for some years into the heated atmosphere of political controversy. Returning to England shortly after the outbreak of war, I cast the articles written for the Manchester Guardian, with some other material, into a book entitled The South African War, followed in 1901 by an analysis of the modern war-spirit called The Psychology of Jingoism, which dwelt upon the mixture of national arrogance and folly at the disposal of the imperialists and business men who were the working partners in the preparation and production of modern wars. A larger volume, Imperialism, published in 1902,[1] contained a fuller and more formal discussion of the same theme, dwelling in more detail upon the economic causation and linking the rising struggle for empire with the pressure for investment of surplus profits in the development of backward countries.
During those years I was drawn away from my studies of the history and theory of capitalist economy into controversial causes and movements, which, though not unrelated to my earlier positions, were evidently removed from the calm, dispassionate atmosphere which economic scientists professed and sometimes practised. I cannot pretend that this latter process was favourable to a disinterested and purely objective view of economic science. On the contrary, by enlisting my combative instincts in defence of my heretical views of capitalism as the source of unjust distribution, over-saving, and an economic impulsion to adventurous imperialism, it led me for a time to an excessive and too simple advocacy of the economic determination of history. When I wrote my volume on Imperialism I had not yet gathered into clear perspective the nature of the interaction between economics, politics, and ethics, needed for anyone who might wish to claim the title of Sociologist. It was only at this period, when I was entering middle age, that I became largely engaged in active movements and “causes” along these three related lines. As lecturer for ethical societies, controversial anti-Imperialist and semi-Socialist in the Press, and sometimes on the platform, I gradually brought my ethical and political thoughts and sentiments into what I still hold to be their true organic relations with the business life and its economic science. “Economics” still remained the central occupation of my mind, but | was more and more drawn into the two positions which severed me from economic orthodoxy, first the insistence upon the growing part to be played by the State and political forces in the realities of economic life; secondly, the fundamental “immorality” of a business system in which all markets were morally damaged by differences in bargaining power and the settlement of market prices alike for goods and services by the play of selfish interests.
A more salutary experience of this period was the series of long visits to the United States and Canada, where I came into close contact with a play of economic forces simpler and more dramatic than those operative in England. A long journey through Canada in the autumn of 1905, recorded in a series of articles in the Daily Chronicle and afterwards in a small book Canada To-day,[2] gave me new light on the relations between economics and politics within the British Empire. In particular it disclosed the beginnings of imperial protectionism in the Preferences which had begun to operate in 1898. The general course of Canadian trade during subsequent years showed that, while the tariff had checked the pace of the decline which had been taking place in British imports, it had not stopped that decline, and that the general course of Canadian trade, both import and export, was flowing more strongly than ever towards the United States. This was only natural, because in many classes of raw materials and foodstuffs the United States had a virtual monopoly of the import market, while many of the special needs and tastes of Canadian consumers could only be supplied from American sources. Moreover, there was no intention in Canada to allow impediments to be placed in the development of her own rising manufactures by allowing the free competition either of British or American imports. Neither the theory nor the policy of Free Trade had any hold upon the politicians or business men of Canada, or of the other Dominions, which later came into the preferential ring. An absolute monopoly of the home market for the home producer was their fixed creed. How to reconcile this prevailing motive with a favourable market for Empire goods which lay outside home production without damaging their trade relations, import and export, with foreign neighbours, has been a problem of increasing complexity.
Contact with this problem in its early shape brought into clear sight the connection between Imperialism and Protectionism which Chamberlain developed in his later career. Both these “isms” received strong support from the “forced” export policy which comes from over-saving and the urgent need for foreign markets to supplement the deficiency of the home market. This deficiency, due to insufficient income of the working classes, was seen to be directly responsible for the “slump” in each trade cycle. In a general time of “unemployment” for our capital and labour, a tariff that will keep out foreign competing goods from our market has an arguable case. If we have idle plant and labour in the motor-car industry, a tariff which will induce purchasers of cars to buy English-made cars, instead of American or French, will increase the total volume of employment in this country, provided the increased price of motor cars is not so high as to cause an equivalent loss of purchasing power for other commodities. A fall in exports will naturally follow any such reduction of imports, but the English-made cars will, through ordinary monetary operations, exchange against other English goods somewhat larger in amount than those which would have gone out in export payment. The net result would be a larger volume of production and employment in this country, at the expense of production and employment in other countries suffering from unemployment. It is a selfish and indeed a shortsighted policy, for when trade “recovery” has taken place we shall find ourselves hampered by tariffs which are obstructive to the best use of our productive resources but which have become vested interests and difficult to remove. Along this line of imperialist protection I thus found further support for my over-saving heresy.
My American experiences brought other aspects of capitalism to the front. Though the lecture tours which I made in the East and Middle West of the United States were chiefly to Universities, other contacts with business men’s and women’s clubs and more popular audiences gave me a clearer understanding of the blend of ruthless competition and equally ruthless monopoly which characterized the economic and political scene in America. I saw a business system which had grown up under free competition and equality of opportunity passing into trusts and other combines derived from the acquisition of lands containing the best supplies of coal, iron, oil, and other important raw materials, supported by railroad and banking connections and by tariffs directed against outside competition. Not less significant were the private ownership and control by a few strong business men in the old cities of the East and the new rising cities of the Middle West over the profitable supply of public utilities and the growing land values. The first clear and comprehensive exposure of the corruption of democratic institutions in American States and cities was given by Ostrogorski in his Democracy (1912), where the operations of the party and electoral system in the hands of business interests were set. forth with an abundance of detailed evidence that was convincing. The early history of the Standard Oil Trust, by my friend Henry D. Lloyd of Chicago, accompanied by Lincoln Steffens’s The Shame of the Cities, helped to reveal those weaknesses in American institutions, and my personal talks with these and other “muck-rakers” (as they were termed by the Press of the profiteers) gave me a clearer understanding of the defects of a political democracy divorced from the terms of economic equality that are essential to its equitable working.
Repeated visits to America during the past half- century have perhaps taught me more of the ethics and politics of the economic system in its modern capitalistic shape and development than any experience available in England, where the play of social-economic forces is more obscure and more impeded by traditional and humane considerations. This contrast appears most striking in the recent American efforts to achieve the elements of political control over unemployment, destitution, and conditions of labour, which have long been established as accepted factors in the working of our own economic system.
Before leaving the American scene I should acknowledge the deep debt I owe to several economic and political teachers with whom I was brought into close contact. One of my early American friends was John Graham Brooks, who for many years was the chief interpreter of current European affairs to American audiences and the closest student of new American movements. Though his sympathies were exceedingly liberal, he owed much of his influence to a careful adhesion to a descriptive factual method of address which enabled him to keep on easy terms of communication with all sorts and conditions of men. Professor E. A. Ross, one of the foremost sociologists, also helped me towards a clearer understanding of American affairs, when I spent a fortnight with him on a lecture visit to Wisconsin. He and Veblen (of whom I shall speak later) seemed to me to have the most comprehensive understanding of the recent evolution of American political-economic life. Incidentally, my visit to Madison gave me an interesting light upon a type of political leader whose mentality would have been impossible in any European country. Madison was the “home town” of William Jennings Bryan, whose rhetorical campaign on the Silver question brought him within sight of the Presidency. As he drove me about the country in his “buggy” he dilated upon the advantages of the scrapping of officials with every change of party, because it brought new men with new experiences into office. The idea that new officials might not be as good as experienced office holders never occurred to him. Every American could easily adapt himself to any post to which, for party reasons, he was appointed! When I met him later in England, after years of further campaigning all over the States, I found the same simple, honest, fervent nature, decorated with the same power of empty oratory.
If, as is likely, these vivid experiences tended to over-stress my sense of the dangers of a dominant capitalism, this bias was to some extent offset by other travels into more peaceful countries. In 1902 I spent a pleasant, profitable fortnight in Denmark with Seebohm Rowntree, who was making a study of the “milk” problem, and there learned a good deal about the education and politics of what is perhaps the most genuinely civilized country in the world. Four years later I spent several weeks in Switzerland, investigating the operations of the Referendum and the general working of Swiss democracy, in order to complete the work to which my friend H. D. Lloyd had given so much attention shortly before his death. The distinctive thought that emerged from these visits was the advantage which a small nation, living upon an equalitarian level in its business and social relations, enjoyed in the working of democracy.
These travels, bringing me into close contact with practical affairs in various countries, strengthened my distinctive attitude in social thinking, viz. the testing of all political and economic conduct by the criteria of human welfare, however difficult and imperfect that process may be regarded from any standpoint of scientific exactitude.