The Psychology of Socialism
Book 4: The Conflict between Economic Necessities and the Aspirations of the
Socialists
Chapter 2: The Economic Struggles Between the East and the West
Gustave Le Bon
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I. Economic competition: -- The Socialists ignore the necessities which dominate the modern world-The will of Governments is more and more subject to the exterior economic conditions to which they are obliged to adapt themselves-The world of industrial and economic relations forms nowadays one single world, and the different countries are becoming less and less able to do as they please-Nations tend more and more to he ruled by external necessities, and not by their individual desires-Consequences of the reduction of distances between the East and the West-Results of the economic struggle between nations having very large requirements and those having very small requirements-The value of merchandise on the market is determined by its value on the market in which it can be produced at the least cost Result of the competition between European goods and the same goods manufactured by the Orientals-Why England is gradually being obliged to give up agriculture-Competition between India and Japan-Future of European commerce-Future of Russia-Eastern competition and Socialism. 2. Remedies:-Objections raised by economists with regard to the consequences of the struggle between East and West -- Pretended excessive production-Why the arguments of the economists can have no value except for the future -Protectionism-Its artificial and makeshift character-The agricultural nations and the industrial nations-Various remedies sought by the Anglo-Saxons for the competition with the East-Why they are turning to Africa-Difficulties encountered by the Latin nations in the domain of industrial and economic competition.
I. ECONOMIC COMPETITION.
HAVE just briefly indicated that the economic and industrial evolution of the world has overturned the old conditions of human existence. This fact will appear more: clearly when we come to consider some of the problems which present themselves to-day.
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In the setting forth of their claims and their dreams-the Socialists have manifested a complete ignorance of the necessities which dominate the modern world. They always reason as though the universe were limited to the country in which they live, as though all that passed in the rest of the world could have no influence on the circles in which they propagate their doctrines, as though the measures they propose would not completely upset the relations of the nation which should apply them with all the other nations of the world. It would have been quite possible for a nation thus to isolate itself a few centuries ago, but to-day matters are no longer the same. The rôle of the governors of each nation is tending more and more to being conditioned by economic phenomena of very remote origin, absolutely independent of the doings of statesmen, and to which they must submit. The art of government consists to-day in adapting oneself as well as may be to external necessities which our desires are powerless to affect.
A country, to be sure, is always a country, but the world of science, industry, and economic relations nowadays forms one single world, whose laws are the more rigorous in that they are imposed by necessities, and not by codes. In the region of industry and economics no country is to-day free to do as it pleases, simply because the evolution of industry, agriculture and commerce have far-reaching effects in all the nations. Economic and industrial events in distant parts of the earth may force the nation which is most completely removed from those parts to transform its agriculture, its industrial processes, its methods of manufacture, its commercial customs, and consequently its institutions and its laws. Nations tend more and more to be ruled by widespread necessities, and not by individual desires.
(223) The action of Governments is therefore tending to become more and more feeble and uncertain. This is one of the most characteristic phenomena of the present age.
The problem which we are about to consider in this chapter will afford an excellent illustration of the preceding remarks. It will show us once again how superficial and impossible of realisation are the formula for universal happiness proposed by the Socialists.
This problem, which I was one of the first to point out at a time already distant, is that of the commercial struggle between the East and the West. The reduction of distances by means of steam and the evolution of industry have resulted in bringing the Orient to our doors, and in transforming its inhabitants into competitors with the West. These competitors, to whom we formerly exported our products, began to make them themselves as soon as they possessed our machines, and instead of buying them of us they now `rant to sell them to us. They will succeed in so doing all the more readily in that their needs, by long-continued custom, are almost negligible, so that the cost of production is far less than in Europe. The average Oriental workman can live on two-pence or three-pence a day, while the European workman cannot live on less than three or four shillings a day. As the price of labour always regulates the price of manufactures, and as the value of the latter in any market whatever is determined by their value in which they can be delivered at the lowest price, it follows that our European manufacturers are seeing all their industries threatened by rivals producing the same goods at a twentieth of the cost. India and Japan have already entered on the phase which t long ago predicted, and are progressing rapidly; China will soon be a third competitor. The imports of foreign-made
(224) goods into Europe are gradually increasing, and the exports of European-made goods are decreasing. It is not the military invasion of the Orientals that we have to fear, as has been suggested, but that of their products.
For a long time this competition has been confined to the sphere of agricultural produce, and from its results we can judge what will happen when it extends to manufactured articles.
The first results of this competition have been, as M. Méline has recently observed in the Chamber of Deputies, to lower by one-half in twenty years the value of agricultural products-cereals, wool, wines, alcohol, sugar, and so forth. Wool, for example, which in 1882 was worth about ninepence per pound, is worth only half that sum to-day. Tallow has fallen from 36s. to 16s.
Many economists, and myself amongst the number, consider these reductions in price to be advantageous, since the public, that is to say, the greater number, finally profit by them ; but it is easy to realise that there are points of view from which these reductions may be regarded as harmful. The gravest inconvenience resulting therefrom is that of placing agriculture in a precarious condition, so that some countries might be obliged to abandon it, a state of things that at certain moments might have serious consequences.
The hypothesis that some countries may be forced to renounce agriculture is by no means chimerical, for it is being gradually realised in England. Having to compete with both India and America in the matter of cereals, she has gradually given up producing them, and this in spite of the perfection of the English methods, which allow of crops of 30 bushels to the acre. To-day the annual production of corn in England has fallen to 63,000,000 bushels, while the annual consumption is 193,000,000 bushels. England is therefore obliged to buy 130,000,000
(225) abroad. If she were imprisoned in her island, or if she had not the necessary means to procure this surplus, a great part of her inhabitants would be condemned to die of famine.
France, essentially an agricultural country, has been able to prolong the struggle, thanks to protection, a sufficiently temporary and fictitious means. Her interest in the struggle is vital ; but how much longer will she be able to hold out ? She produces annually 275 millions of bushels, a figure which may fall in a bad year to 200, or rise in a good year to 370 millions. Wheat is to-day worth about 7s. 6d. per cwt., and has been steadily falling in price for several years. This price, however, is artificial, since foreign corn is subject to a protective duty of nearly 3s., its actual value being 4s. 6d., the sale price on the foreign markets, in London, for instance, or New York. This price must infallibly suffer a further fall. In the Argentine Republic Italian cultivators are able to produce wheat at is. 10d. per bushel.
Will it be possible much longer to correct this progressive fall by equally progressive protective duties, intended to maintain artificially the dearness of a staple food, and consequently to prevent the people from benefiting by the universal cheapness ? As the annual consumption of wheat in France is 120 millions of hectolitres, the present tariff of 7 frs. per hectolitre, which raises the price of bread by at least a third, represents an annual sum of £33,600,000 levied on the whole populace for the benefit of a few large landowners, for the majority of farmers produce only sufficient for their own needs, and have none to sell. All that can be said in favour of such arbitrary proceedings is that they possess a provisional value in the matter of prolonging the existence of agriculture in a country, or allowing it time enough to ameliorate its condition. But soon no Government will
(226) be powerful enough to maintain artificially the dearness of a staple of life.
But the East had hardly entered the lists when the decadence of European agriculture began. The origin of this decadence is to be found in the production of cereals in America, where land costs next to nothing, while in Europe it is extremely dear. When America in her turn found herself in competition with countries such as India, where not only does the land cost nothing, as in the United States, but where labour is ten times as cheap, she suffered the same fate as England, and her agriculture is to-clay threatened with complete ruin. The agriculturalists of America find themselves to-day in the most precarious situation. M. de Mandat-Grancy makes mention of farms which were formerly worth $300 an acre which to-day cannot find purchasers at $10. No protective tariff can remedy this state of things, since the Americans are concerned in exporting not in buying cereals. No protective tariff can prevent them from finding themselves in competition on the foreign markets with countries which can produce wheat at far lower prices.
Limited at first to raw materials and agricultural products, the struggle between East and West has gradually extended itself to industrial products. In the Farther East, in Japan and India, for example, the wages of factory hands are rarely more than halfpenny per diem, and their foremen do not receive very much more.
M. de Mandat-Grancy mentions a factory near Calcutta employing more than 1,500 hands, of which the native sub-manager receives a salary of rather less than £10 per annum . With the price of productiun so low as this it is not surprising that the Indian exports have increased in ten years from £28,500,000 to more than £160,000,000.
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But India possesses but little coal, while Japan possesses it in such quantity that she is able to export it at half the price of English coal. The progress of this country has consequently been even more rapid than that of India. Possessing coal, that greatest of the sources of national wealth, she had only to buy and imitate European machines in order to find herself on a perfect footing of equality with Europe as regards productive capacity, and on a greatly superior footing as regards economy of production, on account of the low rate of wages.
To-day Japan has large factories : cotton factories, for example, employing 6,000 workers,[1] and so prosperous that they are able to pay dividends of from 10 per cent. to 20 per cent., while the dividends of equivalent concerns in England are every day growing less, and have fallen to 3 per cent. for the most prosperous. Others are failing, and no longer declare dividends, simply because their exports are every day diminishing on account of Oriental competition.
The Orientals have begun to manufacture, one by one, all European products, and always at such low prices as to render competition useless. Watches, clocks, pottery, paper, perfumery, and even so-called Paris-made goods, are now being made in Japan. European articles are thus being gradually driven from the East. There are some manufactures, matches, for instance, which the English formerly exported at the rate of £24,000 per annum, a sale that has fallen to £400, while the Japanese
(228) production of this article has risen from nothing to a sum which in 1895 amounted to £91,000. In Geio the Japanese exports in umbrellas amounted to £28 ; five years later it had risen to £52,000 and it is the same with every article they have begun to manufacture.
This wealth of production soon led the Japanese to extend their markets, and in order to avoid dependence on the navies of Europe they first began to purchase vessels and then to build them for themselves. They have great liners, built on the latest models, and lit with electric light. One single company, the Nippon Yusen Kaisha, possesses 47, which compete with our Messageries Maritimes, and especially with the Peninsular and Oriental Company. They have established a bi-monthly service between Japan and Bombay, another with Australia, and are preparing to establish one to France and England. The crews of these vessels are paid at the rate of 8s. 4d. per month, and are fed on a few bags of rice.
Although the Chinese, despite their military inferiority, are from many points of view greatly superior to the Japanese, they have not yet entered the industrial movement, but we can see the time approaching when they will do so. We can foresee also that with her immense and frugal population, her colossal coal deposits, she will in a few years be the first commercial centre of the world, and the ruler of all markets, and that the Bourse of Pekin will determine the prices of merchandise in the rest of the world. We may already form some idea of the power of Chinese competition when we consider the fact that the Americans, recognising the impossibility of struggling against them, have been obliged, as their only resource, to expel the Chinese from their territory by force. The dour is not tar distant when a cargo of European merchandise will be a rarity on the Eastern seas. What is to be done ?
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Nearly all the English and German consuls in the Far East are unanimous in their reports on this question. Even our own agents, despite the little interest they take in commerce-above all, despite the incurable incapacity of the Latin mind to form an independent conception of foreign affairs-are beginning to perceive and to point out what is going on around them.
In this ever-increasing economic struggle everything is in the favour of the East. The depreciation in value of silver in the `'Vest has made competition still more difficult for us. Silver, the only currency in the East, has there retained its full value, while in Europe its value has decreased by almost a half. When a Hindoo, Japanese, or Chinese merchant sends to Europe £100 worth of wheat, cotton, or any other merchandise, he receives £100 in gold, which he can exchange for nearly £200 worth of silver, which he then has only to turn into silver money, with which he pays his workmen. These 200 in silver have in his country the same value that they had twenty-five years ago, for the depreciation of silver in Europe has had no parallel in the East, where, moreover, the cost of labour has everywhere remained the same. As the cost of manufacture is no higher than it formerly was, the Oriental manufacturer, merely by selling an article in Europe, disposes of it at double its cost price. Of course he also has to pay double for anything he may buy of us, since he must pay £200 of silver for £100 of gold, so that he has every incentive to sell us more and more and to buy from us less and less. The present rate of exchange accordingly offers the East an immense premium on exportation. No protective tariff short of one absolutely prohibitive can contend with such differences in the cost of production.
Accordingly, European commerce would appear fatally destined to being reduced, in the near future, to the ex-
230) change of merchandise costing twenty times as much as it costs in the East, and paid for in gold, against products costing one-twentieth as much and paid for in silver. As no exchange can continue for long under such conditions, and is lingering on awhile merely because the East has not yet completed the organisation of its industrial machinery, it is plainly evident that Europe is fated shortly to lose her clientèle in the Far East as she has already lost it in America. Not only will she lose it, but she will very soon be condemned-being unable to produce enough to nourish her inhabitant-to buy of her old clients without being able to sell them anything. The Japanese have no illusions as to this state of things. One of their ministers of foreign affairs, Mr. Okuna, speaking of Europe in a recently published speech, expressed himself in these words : " She exhibits symptoms of decrepitude. The coming century will see her constitutions in fragments and her empires in ruins."
I believe Japan will be ruined long before Europe, for the simple reason that she has superimposed, on her own civilisation, and without being able to fuse the two, another civilisation which has nothing in common with her past, and which will presently lead her into the completest anarchy. But China, by far the superior of Japan in many respects, and notably in the matter of commercial honesty, is destined to have a powerful future. These small-skulled Asiatics, who can effect nothing but servile copies of our inventions, are doubtless barbarians, but history shows that the mightiest empires have always been brought low by barbarians.
Many causes will arise to complicate, for the greater number of the European nations, the, difficulties of the commercial struggle with the East. When the Trans-Siberian railway is finished all the commerce between the
(231) East and the West will tend to concentrate itself in the hands of Russia. As we know, this railway will cross part of China and unite Russia with Japan. The 130 millions of Russia will then be in contact with the 400 millions of China, and Russia will become the first commercial power of the world, since the transit between the East and the West will necessarily be in her hands. From London to Hong-Kong is about thirty-six days by sea. By the Trans-Siberian railway it will be about eighteen. The sea-route will doubtless then be as completely abandoned as the Cape route is to-day, and what then will be the use of England's commercial fleets ? France will lose what little trade remains to her. In that day she will perhaps regret the £400,000,000 lent to Russia, a large portion of which will have gone to the making of this disastrous competition. In 1887 we had £80,000,000 in Russian securities : ten years later the amount reached £400,000,000. It is not unreasonable to ask whether we should not have gained much more by devoting this enormous sum to the development of our own industries and our commerce.[2]
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The struggle between the East and West whose development I have just denoted is only at its commencement, and we can but suspect the issue. The dreamers of perpetual peace, of universal disarmament, imagine wars to be the most disastrous of struggles. They certainly do destroy a large number of individuals, but it appears highly probable that the industrial and commercial struggles which are approaching will be far more murderous and will accumulate more ruin and disaster than ever did the bloodiest wars. Such struggles, so peaceful in appearance, are in reality implacable. Pity is unknown to them ; to conquer or to disappear are the only alternatives.
Socialism scarcely glances at such problems. Its conceptions are too narrow, its horizon too limited. Those nations in which it has most firmly taken root will be those for which the commercial struggle with the East will be hardest, and the defeat of the vanquished most rapid. Only those nations which possess a sufficient degree of initiative in industrial matters, sufficient intelligence to perfect their machinery, and to adapt it to new necessities, will be able to defend themselves. It is not Collectivism, with its ideal of slavish equality in work and wages, that will be able to furnish our workers with the means to struggle against the invasion of Eastern produce. Where will it find the money to pay its workers when their wares find no more purchasers, when all the factories
(233) have one by one been closed, and when all the capitalists have departed for countries in which they meet with hearty welcome and easily earned dividends, in the place of incessant persecutions ?
2. THE REMEDIES.
I have just shown how the economic competition between East and West arose and has developed. The facts I have cited show in what manner the economic necessities of the present time are contrary to the aspirations of the Socialists, and how ill the latter have chosen the time for presenting their claims. Now, in examining the possible remedies for the economic competition which eve see growing before our eyes, we shall once again discover how incompatible is victory in the struggle with the Socialist ideal.
I must observe, first of all, that it is easy to attack in theory the pessimistic conclusions I have drawn from this state of things. The economists will tell you, with reason, that hitherto there has never been such a thing as actual over-production of any article ; that the slightest excess of production is perforce accompanied by a fall in price ; and that if as a consequence of competition the European workman is obliged to content himself with a salary of a few pence a day, the smallness of his wages will be without inconvenience when for these pence he is able to obtain all the articles for which he had formerly to pay several shillings. The argument is perfectly just, but it is hardly applicable to any but a remote period, a period, therefore, that does not interest us to-day. Before this phase of the universal abatement of the value of thins there will elapse a long transitional period of disorder. This purled will he all the more difficult to live through in that the conflict between East and West is not merely a struggle between men earning different
(234) wages, but also, and above all, a struggle between men whose needs are different. This is the factor which made competition with the Chinese impossible to the Americans, who were obliged to expel them. The equality of chances could be established only by the Chinese establishing themselves in America and acquiring the tastes and rates of expenditure of the Americans. But they were subject to influences too deeply ancestral to change themselves to that extent. With no further needs beyond a cup of tea and a handful of rice, they were able to content themselves with salaries far inferior to those demanded by American workers.
Whatever the future may be, it is the present that concerns us, and the solutions we have to seek are present solutions ; so that the remedy that the economists await -the remedy of the spontaneous evolution of things-is for the time being worthless. As for the system of protection, it constitutes a provisional solution, and one of easy application, and accordingly we see the nations of Europe and America adopting it one by one. A small and sparsely populated country may, theoretically, surround itself with a high wall, and refrain from troubling itself about what is passing elsewhere ; but where are such countries to be found in the West ? According to all statistics, there is hardly a country in all Europe, on account of the excessive increase of population, which could produce enough to feed its inhabitants for more than six months. Supposing that a country did surround itself with the wall of which I have spoken, at the end of six months it would be obliged, under pain of perishing of hunger, to break through the wall and go forth to buy food ; but with what would it pay for the corn and other produce it required,? Hitherto Europe has acquired the products of the East by means of merchandise ; but very soon the East will have no more need of our mer-
(235) -chandise. For commerce is based on exchange, of which money is only the conventional symbol.
Apart, then, from scientific discoveries, which are certainly possible, the future of Europe, and especially of those countries which live principally by their commerce, would appear to be sufficiently gloomy.
In the coming struggle two categories of nations alone would seem to be fitted to resist. First, those nations whose agriculture is so well developed, and whose populations are so small, that they are able to suffice for themselves and almost completely to abandon outside commerce. Secondly, those nations whose initiative, power of Will, and industrial capacities are highly superior to those of the Orientals.
Few European nations to-clay find themselves in the former category ; of those few France, happily for herself, is one of the foremost. She produces almost enough to support her populace, and it is by a very sure instinct that she takes care not to increase her population, and disdains the lamentations of the statisticians on that point. She would only have to increase her agricultural returns or reduce her population a little in order to produce enough for her subsistence. Far from concerning ourselves with industry, in which we are bad, or with commerce, in which we are incapable, it is towards agriculture that we should direct all our efforts.[3]
The English and the Americans belong to the second of the categories I have indicated. But only by means of
(236) extreme activity and constant improvement of machinery will they be able to maintain their superiority. It will be a conflict of superior capacity against mediocre and inferior capacity. It is thus that the Americans have been able, by immense efforts, gradually to decrease the prices of production by means of machinery, despite the high prices of labour. We find in the United States blast-furnaces of which a single one can run 1,000 tons French of metal per day, while ours can found at most l00 or 200 tons ; steel works which roll 1,500 tons per day, while ours turn out 150 in the same time ; machines which can load 1,000 tons per hour on rail ; others which lade a vessel of 4,000 tons in a few hours, and so forth.
To keep on this looting qualities of initiative and capacities are requisite that few nations to-day possess, and which are the most precious of all inheritances, although so antipathetic to the Socialists. With such qualities no difficulties are too great to be surmounted.
If all these efforts do not avail the Anglo-Saxons they will find other remedies ; and they have already sought them. Several manufacturers have succeeded in competing with the Orientals on their own ground, by founding factories in the East and employing native workmen. English manufacturers who could only carry on business at a loss in England have settled in India and entered into competition with English manufactures. But this emigration of capital and capacities, if it were to become general, would leave the English workman inevitably without work, and could scarcely have any other result than to point out to the capitalists the road that tine claims of the Socialists may one day force them to take. We may well ask ourselves what would become of a State thus deprived of all its capital and all its best brains, and composed entirely of mediocrities
(237) in talent and fortune. Then would Socialism be able to develop itself freely, and to impose its iron slavery.
But the English statesmen are seeking other means to avoid the dangers they see approaching. Knowing that the East must soon be closed to their shipping, they are now turning to Africa, and we have seen how England and Germany have in a few years taken possession of the whole continent, leaving the Latin nations only a few strips of worthless territory. The empire which the English have made for themselves, which reaches from Alexandria to the Cape, comprising nearly half of Africa, will very soon be covered with railways and telegraphs, and in a few years will undoubtedly form one of the wealthiest regions of the world.
The hereditary aptitudes of the Latin peoples, their social organisation, and their system of education, forbid them all such ambitious designs. Their aptitudes are in the directions of agriculture and the arts. They succeed very indifferently in industry, in foreign trade, and above all in colonisation, even when their colonies are at their very doors, as Algeria. It is a fact to be regretted, certainly, but not to be denied, and the knowledge of it is at least useful so far as it helps to make us understand in what direction our efforts should or should not be directed.
For the rest, the Latin nations need not, perhaps, too greatly regret that they will not be able to play a very active part in the industrial and economic struggle which appears destined, in the near future, to displace the poles of civilisation. This struggle, painful enough for energetic natures, will be absolutely impossible for others. The work of simple labourers is always hard and ill-paid. Contrary to the dreams of the Socialists, the future will show it still harder and still worse paid. It seems as though our civilisations can prolong themselves only by means of harder and harder servitude on the part of the mass of
(238) workers. Industry and machinery must grow more and more oppressive. Only at the cost of labour every day more painful, at the cost of a terrible over-pressure that will necessitate veritable hecatombs of human lives, will the industrial and commercial nations of Europe be able without too great hazard of failure to encounter the peoples of the East on economic grounds. In every case there will be a war far more atrocious, murderous, and desperate than the military slaughters of old, for no illusion, no hope, will hover over it. The beacon-lights of the old consoling faiths are flickering, and will soon be extinct for ever. Man, who fought of old for his hearth, his country, or his gods, seems condemned to have no ideal in the struggle of the near future but that of eating his fill, or at least not to die of hunger.
