The Significance of a Planned Economy to the College Graduate



Delivered at Commencement Exercises of Lehigh University, Bethlehem, Pa., February 20, 1944

Vital Speeches of the Day, Vol. X, pp. 330-333.

EVERYBODY knows the story of the man who went to a cheap restaurant, and began describing the steak he wanted. It was to be a porterhouse about an inch and a half thick, he told the proprietor; under-done with the blood oozing. "Can you give me a steak like that?"

"Gosh no," said the proprietor. "If I had a steak like that, I'd eat it myself!"

That's the way I feel about advice; if I had any good enough, I'd eat it myself I I always wonder how people can believe in fortunetellers, who can tell anybody how to make a fortune, but have to earn their own livings by doing it at a dollar a head. Commencement exercises often remind me of that. We old fellows tell you young fellows how to do what we'd like to have done, and haven't. Advice is certainly one of the things it's more blessed to give than to receive, and so I'm going to try to resist the temptation to regulate your lives and discuss pretty nearly everybody else's effort to regulate them.

Until a few years ago, every man's life was assumed to be his own responsibility. Our government was the servant of its citizens; not their master. Its purpose was to protect life and property, and, that done, to make itself as little a nuisance as possible. Whole days passed without orders from Washington. If you itched for anything, you scratched for it. When the scratching produced a return, you spent part of it as you liked, and saved the rest, without filing reports as to what you did with that nickel. You put your savings in a bank, or in stock or bonds, with confidence that they would still be yours, and that a dollar would still be a dollar when you woke in the morning. Your life was pretty much up to you; if you behaved yourself, you might be almost as unaware of the government of the United States as of the government of Greenland. Ability, character, industry and thrift were the four aces that won the jackpot. There were laws to prevent fouling or hitting in the clinches, but nobody told Babe Ruth that he mustn't bat any harder than the Bush Leaguers, or Jack Dempsey that he mustn't bit any harder than I could, and both of them that they must proceed under rules designed to cover athletics in a home for cripples. Nobody ever told the Babe that, if be earned more than the Bush Leaguers, the money would go to Judge Landis, to be distributed among the people who cleaned the Polo Grounds. I needn't remind you that, whatever the social injustice of that system, it made us the greatest and happiest and most prosperous nation on earth.

And then a lot of things happened.

First, the Russian Revolution. Next, the justly-celebrated Depression, which made the Soviet's fanatical, well-financed and organized effort to extend revolution a blazing torch in a world of inflammable ruins. Throughout this planet, war-weariness and the depression created a general desire to sit back and let George do it; to turn over our destinies to a Hitler who by any other name would smell as sweet; to exchange liberty for so-called security, and our birthright for a mess of pottage that proved to be less pottage than mess. Finally, demagoguery was not slow to take advantage of all this by fanning envy and class hatreds; by reminding us that the higher the fewer, and the manyer the more powerful. These are the reasons why the tendency to paternalism and state control began at the same time all over the world. Here, a citizenry once confident that votes could "keep us out of war" is now equally sure you need only vote to "soak the rich," for planned economy and government ownership and direction, in order to bring about universal abundance, to have more by producing less, and to establish, not equality of opportunity, but equality of men. No one ever asks himself: "If all men are equal, why do we have foot-races?"

Why do I bore you with all this on graduation day—the day of all days when the world seems your oyster? Well, that's precisely why; because that oyster is going to swallow you if you don't pull its teeth. Very many of you men are going into the armed services. It's right and essential that you fight totalitarianism abroad. It's equally right and essential that we fight it at home. What's the use conquering dictatorship in Germany if we're to return to dictatorship—of man or mob—in the United States? This is the significance of a planned economy to the college graduate: Do you want to come back to a country in which your life is up to you, or to one in which it is up to Washington? Do you want to be the captain of your fate, and the master of your soul, or will you be happier and more secure as a mere cog in the vast machine of government? Because this question, and not what you have learned here, or your character and capacity, or even, in the long run, how bravely you fight abroad, is going to be the ultimate answer to your future. In the grasp of an omnipotent state, it isn't going to matter very much whether you are a man or a molecule; you can have no more control over your destiny than you could have over an open umbrella in a cyclone. And because we are at the crossroads, because the decision whether government is to be servant or master still rests with us, it may be worth while to examine the pill that so many of us seem willing to swallow whole because it looks pretty. What are liberalism, socialism, collectivism—all the nice, new, shiny alien isms? What is planned economy, and can theplan be executed without some form of totalitarianism? Let's get our definitions straight. Let's not be like the bellow I heard in a radio quiz recently, who defined a tmt as "similar to a bolt, only just the opposite, being a little iron hole with wrinkles around the inside of it." The trouble with me is, I love the dictionary. When I look up a word, I get so interested that I read pages, and then find I've forgotten the word I was looking up. I agree with Bill Nye that the dictionary is a great book. Bill Nye said, "Of course, the plot is rotten, but the author's vocabulary is wonderful." And the dictionary tells me that "liberal" is derived from Liber, the ancient god of wine, and implies a state of looseness and intoxication. In "Henry VIII." Shakespeare said, "When you are liberal, be sure you are not loose." Shall we try to be sure of that?

There's nothing new about the idea of a planned economy. It probably took root very soon after men ceased swinging from trees by their tails. The first recorded practice of the theory was that of a Babylonian monarch who died about 2185 B.C.—but, as the little boy said when his mother spanked him, you don't have to go back that far. You don't even have to go back to Greece or Rome—to Diocletian or Constantine, or to the account of the consequences given by Sartell Prentice or James Henry Breasted. Prentice writes that this economy "required the full force of government, and, in the exercise of that force, liberty perished." The system has been tried scores of times; liberty always perished under it, and prosperity never was born. We began trying it a few years back, when "the economy of scarcity" dictated plowing under crops and slaughtering pigs—and I don't mean those in authority. Governments move in a mysterious way their blunders to perform. Between 1933 and 1937, we spent 1.8 billion dollars for this curtailment of animals and acreage, while we were spending 2.3 billions to bring vast new areas under cultivation. The worst flood on record in the Tennessee Valley briefly inundated 541,000 acres of land, while, by 1940, the T.V.A, Flood Control had already permanently put under water 917,000 acres of land. Necessarily, now and throughout the war, we are living under complete government control and regulation. Has it worked out so well that you'd like to see it continued after the war?

Government planning and control might be the solution of all problems // government were beneficient omniscience and omnipotence. The fly in the ointment is that government is merely you and me, and the butcher and baker, and even the politician doing a stretch in Sing Sing. Government is largely men who, having failed at everything else, landed in Washington. That the sum of all this fits government for designing and directing our lives seems open to doubt. Looking over the roster and the record, one rather inclines to Wood row Wilson's view that "I have never found a man who knew how to take care of me, and so .. . . I conjecture that there isn't any man who knows how to take care of all the people of the United States." Nevertheless, the delusion persists. Hirohito is worshipped as a god. Hitler as something a little more infallible, and a few years ago even Americans thought that Mussolini and Fascism had something in them because the trains ran on time. Even after Italy's economic and military collapse, some of us clung to the myth of the superman until the big blow-up disclosed the complete bankruptcy of the whole system. Something always discloses its bankruptcy and always too late. As a matter of fact, practically every system of government was the planned economy of some sovereign, or robber baron, or feudal lord until 1776, when a group of our countrymen first held that individuals had inalienable rights, and that "tosecure these rights governments are instituted." At that time, Tom Paine wrote that "Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one." Thomas Jefferson asked, "What has destroyed liberty and the rights of man in every government which ever has existed?" and answered, "The generalizing and concentrating all cares and powers into one body." Herbert Spencer thought government invariably "slow, stupid, extravagant, unadaptive, corrupt and obstructive." In the face of all this, it is simply amazing that, as Ortega y Gasset observed, "When the mass suffers any ill fortune, or simply feels some strong appetite, its great temptation is that permanent sure possibility of obtaining everything without effort, struggle, doubt or risk, merely by touching a button and setting the mighty machine in motion."

How many of you fellows ever read the Constitution of the United States? I'd ask you to rise, but I'm afraid somebody'd be killed in the crush. A recent poll showed that 72 percent of the people reached thought the government should provide for them, and were in favor of state socialism, and opposed to capitalism. Do you think they ever read the Constitution, or understand that one of its chief implications is the rights of minorities, and the right of a man to keep what he earns and saves? By amending that Constitution, of course, you can have Socialism, Communism, or any other ism—but I don't think you can call it Americanism. Americanism is freedom of speech, freedom of the press, freedom of faith, and free enterprise. Without that, the other freedoms wouldn't last as long as that famous dog with tallow legs chasing an asbestos cat through hell.

What is Capitalism? In the bright lexicon of our day, it's a dirty word. As you must have learned here, capital is ownership of the tools for production. The man who has a pick and shovel, or a pencil and the ability to write—either man is, in a small way, a capitalist. The man who owns a factory or a railroad is a big capitalist, but, with one or two exceptions, there ain't no such animal. Our factories and railroads are owned by millions of people. It takes big money to build and run factories, and that money can come from only one source—the individual. It can come directly from the individual, because he is a free man, and wants to put his money into factories, with the chance of a profit, or it can come from the individual indirectly, through government, through taxes, because the individual is no longer free, and nobody cares whether he wants to give up his money or not. In that case, the government owns what the individual pays for. He has no voice as to what is done with his money, and no return from it, except whatever living the government cares to provide. He has no say as to his hours, or wages, or working conditions, except through the ballot, and the first thing he looses are freedom of the ballot and freedom to bargain. In other words, in this machine age you've got to have capitalism—government capitalism or private capitalism. The only difference between the two—between capitalism and the parasite, socialism—is exactly the difference between a snake and a flea—the snake crawls on his own belly, and the flea isn't so darned particular.

There are two definitions of Capitalism: One that of Karl Marx, the father of all the easy-marks—and very few people ever read htm, either. Most of 'em got their knowledge of his theories as my cook says she got fat—by inhaling what's cooking. The other definition I take from the Century Dictionary: "Capitalism is an accumulation of the products of past labor, capable of being used in the support of present or future labor.

Any short talk dealing with this inexhaustible subjectmust be like a chorus girl's tights, which touch everything and cover nothing. For me, the best modern text-book on the topic is Carl Snyder's "Capital, the Creator." Snyder presents what he believes—and I believe—to be "clear, statistical and factual evidence . . . that there is only one way that any people in all history have ever risen from barbarism and poverty to affluence and culture, and that is by that concentrated and highly organized system which we call Capitalistic—the only way throughout the whole eight or ten thousand years of economic history."

"Who and What," Snyder asks, "created the industry that is responsible for our present comfort, and prosperity, and culture? Labor? In a sense, 'labor' contributed almost nothing" It did not invent the dynamo, for example, or develop it. To do that required the genius and skill of three generations of brilliant engineers and physicists. Who paid for ail this long experimentation; the living wages of these thousands of technicians, involving the investment of tens of millions of dollars? Labor? No. Capital savings and the capitalistic system. It is this system that has fed labor, and clothed it, and given it comparative ease and luxury. "No agricultural or pastoral nation," says Snyder—that is, no noncapitalistic nation—"has ever grown rich, powerful and civilized." That is as true today as in the time of Babylonia and Sumeria. . . . "When a nation is given over to visionaries, doctrinaires, and novices in social experimentation, its decadence has begun!"

When Marx, and even the daddy of all economists, Adam Smith, subscribed to the theory that "labor is the source of all wealth," they certainly were not thinking of the age when electric power, in the U. S. alone, would equal the human power of half a billion men, working eight hours a day. And they were not thinking of all labor; they were not including you and me, and the managers and executives, and Edison and Steinmetz. They were totally disregarding the profit motive even in manual labor. It is the man with the hoe or the hammer who chiefly requires the profit motive—not the Edisons and Steinmetzes. As a matter of fact, the controlling incentive for most of the other type of man is fear of losing his job, and, when labor unions eliminated that fear, efficiency went into a state of decline.

There is no better example of starry-eyed theorizing than talk of abolishing the profit motive. In our stage of civilization, there is practically no other. From cradle to grave, we are moved by hope of reward. Even the promise of heaven is an appeal to the profit motive. In my new book, "Guide Posts in Chaos," I quoted the Rev. Ralph Sockman's observation of "the slot-machine attitude toward God; we put in a prayer, or a decent act, and expect to take out a prosperous business, or an eternity of bliss." The flaw in all starry-eyed theorizing is that it takes no account of human nature. If and when mankind reaches perfection, we sha'n't need any government and it won't matter the least whether we are Socialists, Communists, or Seventh Day Adventists. If and when all of us "work for the joy of working," we can abolish wages, and labor unions, and banks, and the profit motive. Until then, this babble merely recalls that of the crowing infant whose proud father, looking into the cradle, exclaimed, "He's going to be a politician 1 Everything he says sounds swell, and means nothing!"

State socialism, of course, it precisely the blessing enjoyed in Russia and Germany. As a matter of fact, Nazi is merely an abbreviation of National Socialist Party. There are modern improvements in Russia and Germany, but the essence of both systems is state ownership or state control. When 1 debated with Norman Thomas in Cleveland in 1940, that perennial candidate on the socialist ticket boasted that "the engineers" of socialized industry "can do for us what they did for the Nazi machine." To which my comment is that of the man who said, "My dinner table seats twenty-five people—God forbid!" Mr. Thomas also remarked that New Deal reforms were borrowed from Socialism—which may or may not be true.

My old pal, the Century Dictionary, defines socialism as "Any system that would abolish the individual effort and competition on which modern society rest . . . and would make land and capital the joint possession of the members ot the community." The Socialists talk especially of government ownership of essential industries. And that brings us to the question whether there are any Cyrus Fields and Henry Fords lying around Washington. It brings us to government-owned telephones and railways in Europe, and to what happened when the government took over our railways during the first World War. Albert Jay Nock declares that "state power has an unbroken record of inability to do anything efficiently, economically, disinterestedly or honestly." Certainly, when we got into our present emergency, the President didn't send for more politicians; he sent for Donald Nelson, and Bernard Baruch, and the President of the Union Pacific Railway. Nobody even suggested Harry Hopkins and Harold Ickes!

Theoretically, Communism, or any other form of collectivism, is community of property, and equal division of the fruits of labor—whoever does the laboring, and whatever its value to society. If you work 11 hours a day, and I work 1 hour—total 12 hours—each of us gets paid for half of 12 hours, or 6 hours. If 9/10ths of the population doesn't work at all, nevertheless they get 9/10ths of the pay of those who do work. If you earn $10, and 9 other people earn nothing, they divide $9 of your earnings, and you keep $1. Naturally, the 1-hour boys, and the $1 boys, are in favor of communism, but, of course, it never worked anywhere in the world. So far as I know, it has never been tried on a large scale, except by the Pilgrim Fathers, in New England, where it brought about a famine and was quickly abandoned. The last pretence of it has been abandoned in Russia—which doesn't prevent groups that take their orders or ideologies from Russia striving to establish the system here.

In the first act of an old melodrama, called "Nellie, the Beautiful Cloak Model," the villian took a slat out of Brooklyn Bridge so that the heroine would fall into the river. In the second act, he tossed her bound body beneath a descending elevator. In the third act, he hit her over the head with a belaying pin, and threw her off a yacht in mid-ocean. And, in the fourth act, when he made love to her and she backed away, the villain asked, "Why do you fear me, Nellie?" So, thousands of the unthinking, or apathetic, or under-cover, ask what we fear. Our whole country is divided into two camps; not Republicans and Democrats, not even the haves and have-nots, but the dos and do-nots. Curiously, the groups most active for collectivism and communism are those that would suffer most from its triumph. They are (1) our socialites, including many of the moneyed class, (2) organized labor, and (3) the so-called intelligentsia. None of these groups has kept any of its rights or privileges under totalitarian government. The rich are first to go into a dock press or before a firing squad. Organized labor is outlawed; here it works to live, there it lives to work. As to the writers and thinkers over there, they write and think what they're told—or else! Our woods are full of runaway German literatti; in Russia, it's the prisons and cemeteries that are full.

The explanation of this state of mind among "the upper asses" is two-fold: For a long time, it was chic to be Fascist or Communist. Beautifully gowned women in Park Avenue would tell you they were strong for a government of brick-layers and stevedores. Part of this was a feeling of guilt. The labor unions, of course, have been pretty much run from Moscow. As early as 1936, Edward Dean Sullivan, in "This Labor Union Racket," said that the radicals "have settled on labor like a flight of poisonous locusts." With a background of grinding poverty and abuse in their own country, it is astounding how glibly they can fasten that background to the dreams of workers in a nation that has led the world in conditions of labor. I have seen placards about "starvation wages" carried by pickets with pot-bellies, and last month I was harrangued in a mixture of Russian and Yiddish by a woman picket wearing a fur coat and fur-trimmed carriage boots. The intelligentsia, of course, are simply wheels without cogs—rosy-dawners who believe that Utopia can be achieved by act of legislature. Recently, we've been informed that there is no more Communism in America—that the party is dead—but, like Mark Twain, when I go to the funeral of a mule, I'm going to stand at its head!

Most of this nonsense is to be explained by envy or vague idealism. "There is want in the world and there ought not to be. In a land of abundance, there is no excuse for poverty." It would be just as logical to say, "In a land of general good health there is no excuse for the common cold." Believe me, I'm not in favor of starvation and chilblains, but neither do I believe you can make everybody rich by making everybody poor, or increase wages and employment by destroying employers. There are 26.000,000 homes in America and 29,500,000 motor cars (Pre-war figures, of course). There are even more radios. We spend 10 billion dollars a year for recreation and amusements, and so much on cosmetics and beauty shops that a mere man wonders how he can walk a block without meeting Cleopatra. In 1932, while the philanthropy of politicians was still limited to giving cigars and picnics, 14 million out of 26 million heads of families owned their own homes—with a tax valuation of 48 billion dollars. million owned farms. There were 63 million life-insurance policies, 44 million savings bank accounts, and 24 million registered security holders. There were, and are, slums and share-croppers and grapes-of-wrathers—just as the draft showed that we have 433,000 illiterates in spite of compulsory free education.

There are, and always have been, greedy and conscienceless employers—and employes; capitalists and labor-leaders. The conditions under which millions worked 40, or even 20 years ago were rotten; there's no better word. Some of them were rotten 10 years ago, and are now. I never heard anyone—Tory or Prince of Privilege—oppose improving these conditions, and they have been improving very rapidly and by orderly process for nearly 100 years. Between 1850 and 1930, average wages increased 500 per cent—under capitalism, mind youl In 1850, 38 per cent of national income went to labor; in 1930 it was 67 per cent. The manufacturing industries paid 80 per cent of their income in wages, and—GET THIS!—if every penny of profit had been turned over to the workers, wages would have been increased 8 per cent. Sure, we had unemployment in 1932 —so did every other nation, capitalist or otherwise, and the otherwisers were quick to take advantage of it. Bat the only nation in which unemployment remained practically static was the only nation that met the problem by revolutionary means—that is the United States of America.

The principal cause of poverty is that certain people have nothing to contribute to society. There are secondary causes—lack of opportunity to contribute, lack of thrift in productive years, illness—but the basic reason is lack of ability, energy or initiative. Society can do, and always has done something about these secondary causes. But the primary cause must await biological improvement and some undiscovered type of training. Dr. Donald Laird says that, out of our 100 million adult population, about 7 millions are idiots, imbeciles or morons. 25 million more of the "adults" are mental children. 53 million are normal adults, and about 15 million might be considered superior grade. The unfit propagate in enormous numbers. The "lower third" have as many children as the top two-thirds put together. You can't solve this problem by writing Atlantic Charters guaranteeing "freedom from want everywhere in the world." Our bona fide national income has never been over 100 billions a year. (It's a little higher now, but that isn't income; it's spending our savings.) All right, let's be big-hearted, and give everybody an equal share of all the money that comes in. Then everybody would have about $700 a year—minus taxes. That isn't much good, so let's turn over the responsibility to the government. Where is the government going to get 100 billion a year, to give everybody $700. By taxes? Even our present colossal tax program can't raise 1/4th of that amount. By government ownership of industry, and sharing the profits? When did any government ever make a profit from industry, and when did all private industry earn a profit of 100 billion dollars a year? In other words, universal abundance and freedom from want is just so much hooey—unless and until we double or treble production. And we aren't going to get that way by cutting down work-hours, and giving labor or government control of industry. We aren't going to get that way by throwing the baby out with the bath-water—by taking the initiative and self-reliance from 130 million people, and putting it into the hands of a few dozens, or hundreds, in Washington. All of us want a better world, and we're going to get it, but not by scrapping the system that put us where we are today. When you men come home from overseas, I don't think you'll object to finding a fresh coat of paint on the old house, but neither do I think that you'd care about a new stream-lined, self-running mansion where some gadget puts you to bed and kisses you goodnight. I don't believe you'll want your thinking done for you, or your lives planned for you, or to find yourself working for the government with very little chance of reward or advancement. And that goes for a lot of us young and old guys who are staying at home. This country became, and remained great, not through collectivism, socialism, proletarian or any other dictatorship; not through redistribution of wealth, destruction of capital, or the habit of regarding the state as the wet-nurse of its citizens, rather than its citizens as bulwark of the state—not through these things, but through passionate faith in, and adherence to a basic law that began, "We, the people of the United States." "We, the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquillity, provide for the common defense, promote the general welfare, and secure the blessings of Liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America." It worked for 150 years. And so I think, at long last, we, the People of the United States, should say to the would-be wreckers of that Constitution: "If you don't want it, we want it! If you don't like it, go to—somewhere else!" WE like it, and we mean to keep it WE are the posterity to whom these blessings were given; we mean to defend them on every front—we, the People of the United States!"