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own for fluctuations, it entails great financial transactions which add to the market price of the crop, and it lends itself to frenzied speculation on the uncertainty of demand which is as disturbing to prices as the uncertainty of supply. It promotes rings and monopolies in supply, and transfers to financial operations the control of the industry. On account of it, the cotton crop of an ordinary season may be sold from twenty to forty times over.*

Thus, the needs of industry are lost sight of in the pursuit of wealth. Of course, if the holders of raw material were to stifle industry by their folly, they themselves would be involved in its ruin and would lose their market. But that obvious truth does not primarily control their action. Industry is hard to ruin. Consumption must go on whatever difficulties are put in its way. Therefore, raw material may be the subject of the fiercest and most costly speculation, its amount may be limited in the interest of its holders, its price may be artificially forced up, its marketing may be the occasion for an elaborate system of commissions and profits secured by financiers and middlemen, and industry will still go on overcoming all obstacles and shifting costs ultimately on to the final consumer. But the community suffers and has to pay the bills of the waste either in high prices or in a low standard of life.

Obviously, if production is to be carried on with some security and efficiency, the supply of raw material ought not to be the subject of an interest organized apart from the users, but should be subordinated and controlled by the users. It should be

* I have used for the purpose of this summary statement an article on "The Selling and Financing of the American Cotton Crop" in the Economic Journal, December, 1920.

an organic part of the system of production managed to meet its needs and reduce its costs. This contention is indeed admitted by capitalist production itself, where we observe that the tendency is constantly to co-ordinate complementary industries and supplies under one management, and to eliminate separate interests in linked processes. The United States Steel Corporation (capital £369,000,000) was created on this idea, and brought coal, iron ore and furnaces under one management. Soapmaking firms find it necessary to be the owners of their own oil-producing estates and acquire islands in the Pacific and tracts in Central Africa. Iron smelting firms, like Dorman, Long and Co., which is the centre of a great group of contributing industries, work coal mines, lime quarries and iron ore deposits both at home and abroad, and treat the whole as one producing unit, with one trade balance, whilst other firms, especially those engaged in armament manufacture, have, by purchases of each others' shares and exchanging directors, become an intricate network of combined interests. Cotton manufacturers have promoted cotton growing enterprises which they could control, and, like the Fine Cotton Spinners' and Doublers' Association, own plantations. Wherever any form of production is being carried on on a large scale, a tendency arises for it to try and command its necessary raw material on the one hand, and its market (as, for instance, in the case of boot and shoe manufacturers who start multiple shops to sell their products) on the other.

But the best example of this inevitable tendency to co-ordinate the whole process of industry from raw material to the wares passing over the shop counter, is seen in the Co-operative movement. This acquired its power as an agency of distribution through separ

ately managed shops. Its first extension was to provide a wholesale organization for itself, and this it built up. Then it proceeded to manufacture so as to supply the more generally used household necessities, like clothing, bread and other foods. From that it went on to acquire land, both at home and abroad, for agricultural produce including such things as tea and coffee.* From that it proceeded to organize its necessary transport, and became possessed of a fleet of ships. Its latest development is a bank by which it finances itself.

Thus we can see that in industry there is a law of concentration by which not merely do small businesses of the same kind tend to unite into large ones, but different processes with the same inevitability tend to be co-ordinated so that they become related parts of one industrial unit.

I must not anticipate the completion of my argument, however. Thus far I have been dealing with the effect upon production of the control and supply of raw materials by profit-making interests, and I have shown that such control must hamper production, must make it costly, and must prevent social wealth and advantage from being the predominating consideration. In modern production, the tropics are a source of essential raw materials like vegetable oil, and mineral oil abounds where government is weak and civil order uncertain. This leads to territorial annexation, to the economic rivalry of great States, to the exclusion of unpopular ones, to arma

* As an indication of the scale upon which these developments are being made I note on the agenda to be considered by the delegates attending the quarterly meeting of the Co-operative Wholesale Society that approval is asked for the purchase of estates in India, Ceylon, and West Africa, and for land in twenty four different English towns for business extension. (January, 1921).

ments and to war. It also leads to politico-moral results almost as disastrous to a healthy State. It puts temptations in the way of civilized States to employ "natives" as tribute labourers, as has been proposed by our Empire Resources Development Committee, and thus to become demoralized by something akin to slave owning. The next step will be that Capitalism, in its own interests, will establish extractive plants in these regions, use forced labour in them, and export the partly-finished products to go through the more technical final processes here. When that takes place, we approach the end of States, for wealth created after that fashion and brought in as tribute, is a canker at the heart of peoples. All this happens not because community interests require such developments, but because the interests of capitalists must extend their possessions and their conflicts, and must not only dominate the community by their trade combinations, but drag the political State into these foreign annexations and rivalries as well.

FREE COMPETITION

When we follow materials to the next, the manufacturing, stage of production, we find the same evils springing from the same causes. Controlling capital puts itself first. It arranges the markets, if it can, to suit its own interests primarily. In a world of absolutely free competition, public advantage might coincide with capitalist profits. The argument is that too high prices could not be charged, too low wages could not be paid for the necessary skilled labour, adulteration would be difficult, quality in production would carry against inferiority-if we had truly free competition. This is set off, however,

by the consideration that, in bargaining on the open market, labour is at a disadvantage against capital owing to the difference of their training and of the pressure of their necessities, that the public has no protection by reason of its knowledge against adulteration and that it will always be imposed upon by low-priced bad articles. Absolutely free competition requires these amongst other conditions. The purchasing and consuming public must be intelligent enough not to be imposed upon but to take the trouble to understand and pursue its own advantage; there must be no tendency or opportunity for competing capital to combine and, by agreement or extension of control, relieve the pressure which free competition imposes upon rival manufacturers and salesmen; the workman must be really as free as the capitalist to hold out for a just price, not in relation to immediate needs, but to a normal satisfactory life. These conditions do not exist and in the nature of things hardly can exist. The workman in combination can put up a good fight for equality, but sweating is always possible in a very extensive field which may, however, be substantially narrowed in time by such expedients as Wages Boards. The public must trust to honest men to supply it with goods of a quality which it desires but cannot test, and therefore the competition between salesmen, whether of drugs or pots, must always produce a rivalry in the arts of “palming off" and, in a large part, though certainly not all, of its transactions must be concerned not with serving but with victimizing consumers. In fact, it is a complete fallacy to suppose that preying upon the public will be cured by free competition as tuberculosis is by fresh air. The inferior in commerce as in life cannot be stamped

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