My main thesis is
An historian should find no difficulty in defining the stage at which we have arrived. The tour is called industrial civilization. The first stage of the tour is over, and we are embarking on the second. The machine age, or industrial civilization, which started sometime in the eighteenth century, is still far from being over. Its first phase has been called by many names, such as liberal capitalism, or market-economy; the next phase will be called by some other name, we can not yet be certain by what. The point is to distinguish between the technological aspect which comprises the whole of the machine age or industrial civilization, and the sociological, which differentiates the phase which is already behind us from the phase which is still to come.
The present condition of man can be described in simple terms. The Industrial Revolution, some 150 years ago, introduced a civilization of a technological type. Mankind may not survive the departure; the machine may yet destroy man; no-one is able to gauge whether, in the long run, man and the machine are compatible. But since industrial civilization cannot and will not be willingly discarded, the task of adapting it to the requirements of human existence must be solved, if mankind shall continue on earth.
Such, in common sense terms, is the bird's eye view of our troubles. Meanwhile the first phase of the new civilization is, as we saw, already behind us. It involved a peculiar social organization, which derived its name from the central institution, the market. In greater part of the world this market-economy is disappearing in our days. But the outlook on man and society, which it bequeathed to us, persists, and obstructs our attempts to incorporate the machine into the fabric of a stable human existence.
Industrial civilization unhinged the elements of man's being. The machine interfered with the intimate balance which obtained between man, nature and work. Whether our distant ancestors were tree-climbing creatures or whether they squatted in the undergrowth, the ominous fact remains that not until a few generations ago was our habitation physically severed from nature. Though Adam's curse made labour sometimes irksome, it did not threaten to reduce our waking hours to meaningless jerks alongside a moving belt. Even war, for all its horrors, was a means of decision in the service of the continuance of life, not a universal death-trap. It is not possible to foretell whether such a civilization can successfully be adjusted to the abiding needs of man, or whether man must perish in the attempt.
However, as we saw, man's present condition is set by a further fact, not of a technological, but of a social order. For his prime difficulty in grappling with the problem of an industrial civilization arises from the intellectual and emotional legacy of market-economy, that nineteenth-century phase of machine civilization which is rapidly fading away on the major part of the planet. Its baneful inheritance is the belief in economic determination.
Our situation is thus peculiar to the utmost. In the nineteenth century, the machine forced an unprecedented form of social organization, a market-economy, upon us, which proved to be no more than an episode. Yet so incisive was this experience, that our current notions are almost entirely derived from this short period. In my opinion, the views of man and society induced by nineteenth-century conditions were fantastic; they were the outcome of a moral trauma as violent in its impact on the mind and soul as the machine itself was foreign to nature. These views were broadly based on the conviction that human incentive can be classed as “material” and “ideal”, and that in everyday life man mainly acts on the former.
Such a proposition was, of course, true in respect to a market-economy. But only in respect to such an economy. If the term “economic” is used as synonymous with “concerning production” we maintain that there do not exist any human motives which are intrinsically “economic”; and as to the so-called “economic” motives it should be said that economic systems are usually not based on them.
This may sound paradoxical. Yet the contrary view was, as we said, merely a reflection of the peculiar conditions which existed during the nineteenth century.
I will now, most reluctantly, have to intrude upon your intellectual delicacy and proceed to discuss economics. However, I will restrict myself to drawing your attention to the crude outlines of the economic system of the nineteenth century, called market-economy. Under such a system we can not exist unless we buy commodities on the market with the help of incomes which we derive from selling other commodities on the market. The name of the income varies according to what we are offering for sale: the price of the use of labour power is called wages; the price of the use of land is called rent; the price of the use of capital is called interest; the income called profit derives from the sale of commodities which fetch a higher price than the commodities needed to produce it, thus leaving over a margin which forms the income of the entrepreneur. Thus sales produce incomes and all incomes derive from sales. Incidentally, production is being taken care of and the consumers’ goods produced during the course of the year are distributed amongst the members of the community with the help of the incomes they have earned. Such a system can not fail to work as long as every member of the community has a valid motive which induces him to earn an income. Such a motive actually exists under the system: it is hunger, or the fear of it, which those who sell the use of their labour power, and gain with those who sell the use of capital, or land, or make profits on the sale of other commodities. Very roughly, the one motive attaches to the employed class, the other to the employers’ class. Since these two motives ensure the production of material goods we are used to calling them “economic” motives.
Let us stop and consider. Is there anything intrinsically economic about these motives in the sense in which we speak of religious or aesthetic motives being based on religious or aesthetic experiences? Is there anything about hunger or, for that matter, about gain or gambling which may have their attractions, but again that attraction is not intrinsically “economic”? In other words, the connection between these sensations and the activity of production is nothing inherent in these sensations but is contingent upon social organization. Under the market organization, as we saw, such a connection most definitely exists: hunger and gain are linked here, by virtue of that organization, with production. That explains why, under a market-system, we call these motives “economic”. But what about other social organizations, apart from the market-economy? Do we find here also hunger and gain linked with the productive activities without which society could not exist? The answer is decidedly in the negative. We find, as a rule, that the organization of production in human society is such that the motives of hunger and gain are not appealed to; indeed, where the motive of hunger is connected with productive activities, we find that motive merged with other strong motives. Such a mixture of motives is what we mean when we speak of social motives, the kind of incentives which make us conform with approved behaviour. Scanning the history of human civilization we do not find a man acting so as to safeguard his individual interest in the acquisition of material goods, but rather so as to ensure his social standing, his social claims, his social assets. He values material goods primarily as means to this end. Man's economy, as a rule, is submerged in his social relationship. Some of you might have been wondering on what facts I was basing these assertions.
First, there are the fundamental results brought to light by research done by social anthropologists in the field of primitive economics. Two names are outstanding, Bronislaw Malinowski and Richard Thurnwald. Together with some other scholars they made fundamental discoveries on the place of the productive or economic system in society. The legend of the individualistic psychology of primitive man is exploded. Neither crude egotism, nor a propensity to barter or exchange, nor a tendency to cater chiefly for himself is in evidence. Equally discredited is the legend of the communist psychology of the “savage”, his supposed lack of appreciation of his separate personal interest and so on. The truth is that man has been very much the same all through the course of history. Taking institutions not separately but inter-relatedly, we find him behaving in a manner comprehensible to us. Yet as a rule the productive, or economic system is arranged in such a manner that no individual is moved by hunger (or the fear of it) to participate in production. His share in the common food resources is secured to him independently of his part in the productive efforts of the community. Here are some brief quotations. Under the Kraal-land system of the Kaffirs “destitution is impossible: whosoever needs assistance receives it unquestioningly” (Mair, L.P., An African People in the Twentieth Century, 1934). No Kwakiutl “ever ran the least risk of going hungry” (Loeb, E.M., The Distribution and Function of Money in Early Society, 1936). Or this – “There is no starvation in societies living on the subsistence margin” (Herskovits, H.J., The Economic Life of Primitive Peoples, 1940). As a rule, the individual in primitive society is not threatened by starvation unless the community as a whole is in a like predicament. It is the absence of the threat of individual starvation which makes primitive society, in a sense, more humane than nineteenth-century society, and at the same time less economic. The same is true of the stimulus of individual gain. “The characteristic feature of primitive economics is the absence of any desire to make profits from production of exchange” (Thurnwald, R., Economics in Primitive Communities, 1932). “Gain, which is often the stimulus for work in more civilized communities, never acts as an impulse to work under the original native conditions” (Malinowski, B., Argonauts of the Western Pacific, 1930). “Nowhere in uninfluenced primitive society do we find labour associated with the idea of payment” (Lowie, “Social Organisation”, The Encyclopedia of the Social Sciences, vol. xiv)).
There is, secondly, unbroken continuity of primitive society with civilized types of society. Whether ancient despotic civilization, feudal society, city state, medieval urban society, mercantile society or regulative system of the eighteenth-century Western Europe, everywhere we find the economic system embedded in the social system. Whether the actual motives fall under the heading of civic custom or tradition, duty or commitment, religious observance, political allegiance, legal obligation or administrative regulation, issued by state, municipality or guild, makes no difference. Not hunger nor gain but pride and prestige, rank and status, public praise and private reputation provide the incentives for individual participation in production. Fear of having to forego material necessities, the incentive of gain of profit need not be absent. Markets are widely spread under all types of human civilization and the occupation of the merchant also is fairly general. Yet, markets are sites of trading and merchants are in the nature of the things expected to act on the motive of gain. But the markets are mere isolated patches which do not link up into an economy. Never before the nineteenth century did they become dominant in society.
Thirdly, there is the suddenness with which the transformation occurred. This is not a matter of degree but of kind. A chain-reaction was induced, and the harmless institution of the market flashed into a sociological explosion. By making labour and land into commodities, man and nature had been subjected to the supply-demand-price mechanism. This meant the subordinating of the whole of society to the institution of the market. Instead of the economic system being embedded in social relationships, social relationships were now embedded in the economic system. Instead of incomes being determined by rank and position, rank and position were determined by incomes. The relationship of status and contractus was reversed – the latter took everywhere the place of the former. To speak merely of an “influence” exerted by the economic factor on social stratification was a grave understatement. The sides of a triangle do not rightly speaking “influence” the angles, they determine them. The working of a capitalist society was not merely “influenced” by the market mechanism, it was determined by it. The social classes were now identical with “supply” and “demand” on the market for labour, land, capital, and so on. Moreover, since no human community can exist without a functioning productive apparatus, all institutions in society must conform to the requirements of that apparatus. Marriage and the rearing of children, the organization of science and education, of religion and arts, the choice of profession, the forms of habitation, the shape of settlements down even to the aesthetics of everyday life, must be moulded according to the needs of the system. Here was “economic society”! Here it could truly be said that society was determined by economics. Most significant of all, our views of man and society were violently adjusted to this most artificial of all social settings. Within an almost incredibly short time fantastic views of the human condition became current and gained the status of axioms. Let me explain.
The every day activities of men and women are, in the nature of things, to a large extent related to production of material goods. Since, in principle, the exclusive motive of all these activities was now either the fear of starvation or the lure of profit, these motives, now described as “economic”, were singled out from among all other motives and considered to be the normal incentives of man in his everyday activities. All other incentives, such as honour, pride, solidarity, civic obligation, moral duty or simply a sense of common decency were regarded as being motives not related to everyday life, but a rare and more esoteric nature, fatefully summed up in the word “ideal”. Man was supposed to consist of two components: those akin to hunger and gain, and those akin to piety, duty and honour. The first were regarded as “material”, the latter as “ideal.” Productive activities were once and for all linked with the material. Man being strictly dependent upon means of subsistence, this amounted to a materialistic morality. All attempts to correct it in practice were bound to fail, since they now took the form of arguing for an equally unreal “idealistic” morality. This is the source of that fatal divorce of the material and the ideal which is the crux of all our practical anthropology: instead of the “mixed motives” in which man is at one with himself, his division into an alleged “material” and “ideal”, man was hypostasised. The Paulinian dualism of flesh and spirit was merely a proposition of theological anthropology. It had very little to do with materialism. Under market-economy human society itself was organized on dualistic lines, everyday life being handed over to the material, with Sundays reserved for the ideal.
Now, if this definition of man were true, every human society would have to possess a separate economic system, based on “economic motives,” such as existed in nineteenth-century society. That's why the marketing view of man is also a marketing view of society. Under the influence of nineteenth-century conditions it seemed obvious that separate economic institutions must exist in every society. Actually the characteristic of human societies is precisely the absence of such separate and distinct economic institutions. That the economic system is “embedded” in the social relations means precisely this.
This explains the current belief in economic determinism. Where there is a separate economic system the requirements of that system determine all other institutions in society. No other alternative is possible, since man's dependence upon material goods allows of none other. That economic determination was the characteristic feature of the nineteenth-century society was exactly because in that society the economic system was separate and distinct from the rest of society, being based on a separate set of motives – hunger and gain.
Let me proceed to some conclusions.
The task of adjusting the organization of life to the actuality of an industrial civilization is still with us. Our relations to men, work, and nature have to be re-shaped. The atom bomb has made the problem merely more urgent.
The civilization we are seeking is an industrial civilization on which the basic requirements of human life are fulfilled. The market-organization of society has broken down. Some other organization is developing. It is a tremendous task to integrate society in a new way. It is the problem of a new civilization.
But do not let us be intimidated by the bogey of economic determinism. Do not let us be misled into a notion of the nature of man which is poor and unreal – the dualistic fallacy – according to which the incentives on which communal effort, good citizens and high political achievement is organized derive from a different set of motives.
Do not imagine that the economic system must limit our achievement of our ideals in society. Only the society which is embedded in the market is determined by the economic system. No other society is.
Take the problem of freedom. Much of the freedom we cherish – the civic liberties, the freedom of speech and so on, were by-products of capitalism. Need they disappear with capitalism? Not at all. To imagine this is simply an illusion of economic determinism – which is valid only in a market society. Hayek's fear of serfdom is the illogic application of economic determinism of a non-market economy. We can have more civic liberties – indeed extend civic liberties into the industrial sphere.
Mr. Burnham has also prophesised a great deal, on supposedly Marxian lines, about what class is to rule, etc. – all on lines of economic determinism. Yet he assumes the end of the market-economy, in which alone such determinism applies.
The Lasciate ogni speranza1 of economic determinism is left behind us. Together with freedom from enslavement to the market, man also gains a more important freedom; his imagination is free again to create and shape his society, confident that he can possess the fullness of the freedom which he is prepared to plan for, to organise and safeguard.