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Culture and Prosperity

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If one would estimate the damage done by the great political catastrophe to
the development of human civilization, one must remember that culture in its
higher forms is a delicate plant which depends on a complicated set of
conditions and is wont to flourish only in a few places at any given time. For it
to blossom there is needed, first of all, a certain degree of prosperity, which
enables a fraction of the population to work at things not directly necessary to
the maintenance of life; secondly, a moral tradition of respect for cultural
values and achievements, in virtue of which this class is provided with the
means of living by the other classes, those who provide the immediate
necessities of life.
During the past century Germany has been one of the countries in which both
conditions were fulfilled. The prosperity was, taken as a whole, modest but
sufficient; the tradition of respect for culture vigorous. On this basis the
German nation has brought forth fruits of culture which form an integral part of
the development of the modern world. The tradition, in the main, still stands;
the prosperity is gone. The industries of the country have been cut off almost
completely from the sources of raw materials on which the existence of the
industrial part of the population was based. The surplus necessary to support
the intellectual worker has suddenly ceased to exist. With it the tradition which
depends on it will inevitably collapse also, and a fruitful nursery of culture turn
to wilderness.
The human race, in so far as it sets a value on culture, has an interest in
preventing such impoverishment. It will give what help it can in the immediate
crisis and reawaken that higher community of feeling, now thrust into the
background by national egotism, for which human values have a validity
independent of politics and frontiers. It will then procure for every nation
conditions of work under which it can exist and under which it can bring forth
fruits of culture.
Production and Purchasing Power
I do not believe that the remedy for our present difficulties lies in a knowledge
of productive capacity and consumption, because this knowledge is likely, in
the main, to come too late. Moreover the trouble in Germany seems to me to
be not hypertrophy of the machinery of production but deficient purchasing
power in a large section of the population, which has been cast out of the
productive process through rationalization.
The gold standard has, in my opinion, the serious disadvantage that a shortage
in the supply of gold automatically leads to a contraction of credit and also of
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the amount of currency in circulation, to which contraction prices and wages
cannot adjust themselves sufficiently quickly. The natural remedies for our
troubles are, in my opinion, as follows:--
(1) A statutory reduction of working hours, graduated for each department of
industry, in order to get rid of unemployment, combined with the fixing of
minimum wages for the purpose of adjusting the purchasing-power of the
masses to the amount of goods available.
(2) Control of the amount of money in circulation and of the volume of credit
in such a way as to keep the price-level steady, all special protection being
abolished.
(3) Statutory limitation of prices for such articles as have been practically
withdrawn from free competition by monopolies or the formation of cartels.
Production and Work
An answer to Cederstrm
Dear Herr Cederstrm,
Thank you for sending me your proposals, which interest me
very much. Having myself given so much thought to this subject I
feel that it is right that I should give you my perfectly frank
opinion on them.
The fundamental trouble seems to me to be the almost unlimited
freedom of the labour market combined with extraordinary
progress in the methods of production. To satisfy the needs of
the world to-day nothing like all the available labour is wanted.
The result is unemployment and excessive competition among
the workers, both of which reduce purchasing power and put
the whole economic system intolerably out of gear.
I know Liberal economists maintain that every economy in
labour is counterbalanced by an increase in demand. But, to
begin with, I don't believe it, and even if it were true, the
above-mentioned factors would always operate to force the
standard of living of a large portion of the human race doom to
an unnaturally low level.
I also share your conviction that steps absolutely must be taken
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to make it possible and necessary for the younger people to take
part in the productive process. Further, that the older people
ought to be excluded from certain sorts of work (which I call
"unqualified" work), receiving instead a certain income, as having
by that time done enough work of a kind accepted by society as
productive.
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I too am in favour of abolishing large cities, but not of settling
people of a particular type--e.g., old people--in particular
towns. Frankly, the idea strikes me as horrible. I am also of
opinion that fluctuations in the value of money must be avoided,
by substituting for the gold standard a standard based on certain
classes of goods selected according to the conditions of
consumption--as Keynes, if I am not mistaken, long ago
proposed. With the introduction of this system one might
consent to a certain amount of "inflation," as compared with the
present monetary situation, if one could believe that the State
would really make a rational use of the windfall thus accruing to
it.
The weaknesses of your plan lie, so it seems to me, in the sphere
of psychology, or rather, in your neglect of it. It is no accident
that capitalism has brought with it progress not merely in
production but also in knowledge. Egoism and competition are,
alas, stronger forces than public spirit and sense of duty. In
Russia, they say, it is impossible to get a decent piece of
bread.…Perhaps I am over-pessimistic concerning State
and other forms of communal enterprise, but I expect little good
from them. Bureaucracy is the death of all sound work. I have
seen and experienced too many dreadful warnings, even in
comparatively model Switzerland.
I am inclined to the view that the State can only be of real use to
industry as a limiting and regulative force. It must see to it that
competition among the workers is kept within healthy limits, that
all children are given a chance to develop soundly, and that
wages are high enough for the goods produced to be consumed.
But it can exert a decisive influence through its regulative function
if--and there again you are right--its measures are framed in an
objective spirit by independent experts.
I would like to write to you at greater length, but cannot find the
time.