Robert Owen The Abolition Of Profit

Robert Owen, The Abolition Of Profit

The first necessity, if the environment was ever to be changed, was to get rid of profit. There was the essential evil, the original sin. Profit was the forbidden fruit which had compassed the downfall of man and caused his expulsion from the Garden of Eden. Its very definition conveyed an implication of injustice, for it was always defined as whatever was over and above cost of production.

Products ought to be sold for what they cost; the net price is the only just price. But profit is not merely an injustice, it is a perpetual menace. Economic crises resulting from over-production, or rather from under-consump-tion, may always be traced back to an unhealthy desire for profit. The existence of profit makes it impossible for the worker to repurchase the product of his toil, and consequently to consume the equivalent of what he produced. Immediately it is completed the product is snatched up by a superior body which makes it inaccessible either to the maker or to the men who could furnish an equivalent amount of labour or who could offer as the price of acquiring it a value equal to that labour.

The problem is to abolish this parasitism, and the first question that suggests itself is whether the ordinary operation of competition, assuming it were altogether free and perfect, would be sufficient to get rid of it. The economists declare that it would, and the Hedonistic school makes bold to affirm that under a regime of perfect competition the rate of profit would fall to zero. But Owen believed nothing of the kind. He regarded competition and profit as inseparable, and if one was war the other was simply the spoils of conflict.

Accordingly some form of combination must be devised which will suppress profit, together with "all that gives rise to that inordinate desire for buying in the cheapest market and selling in the dearest."

But the instrument of profit is gold or money. Profits are always realized in the form of money. Gold is an intermediary in every act of exchange, and its intervention goes a long way towards explaining the anomaly of selling a commodity for more than cost price. The objective, then, must be money, and it must be replaced by labour notes, which will supply us with a measure of value altogether superior to money. Seeing that labour is the cause and substance of value, it is only natural that it should afford us the best means of measuring value. It is quite obvious that ample homage is paid to the Ricardian theory of value, but conclusions both novel and unproved are drawn from it.

The producer who wishes to dispose of his produce will be given labour notes in proportion to the number of hours which he has worked. In the same way the consumer who wishes to buy that product will be called upon to pay an equivalent number of labour notes, and so profit will be eliminated.

The condemnation of money was not new, but what was original was the discovery that labour notes could supply the place of money, a discovery which Owen considered "more valuable than all the mines of Mexico and Peru." It has truly been a wonderful mine, and has been freely exploited by almost every socialist. But it hardly squares with Owen's communistic ideal, which aimed at giving to each accord­ing to his needs. The labour notes evidently imply payment according to the capacity of each. Besides, what is the use of any system of exchange that is not to be employed for purposes of distribution?

It remained to be seen whether this elimination of money could actually be realized in practice. An experiment to that effect was tried in London with the establishment of the National Equitable Labour Exchange. This was the most interesting experiment in the whole movement, although Owen himself was not very proud of his con­nexion with it. It took the form of a co-operative society with a central depot where each member of the society could deposit the product of his labour and draw the price of it in labour notes, the price depending upon the number of hours of work the product had cost, which the member himself was allowed to state. These products, or goods as they were now called, marked with a figure which indicated the number of hours they had taken to produce, were at the disposal of any member of the Exchange who wished to buy them. All that a member had to do was to pay the ticketed price in labour notes. And so every worker who had taken, say, ten hours to make a pair of stockings was certain of being able to buy any other article which had also cost ten hours' labour. In this fashion every one got whatever his product had cost him, and every trace of profit automatically disap­peared. The profit-maker, whether industrial or commercial or merely an intermediary, was effectively removed, because producers and con­sumers were brought into direct contact with one another, and so the problem was apparently solved.

The experiment, which had about the same measure of success as the attempts to establish a communal colony in America, did not last very long. The slightest acquaintance with the laws of value would have convinced the reformer of the futility of his attempt. But it marks an important departure in the history of economic doctrines as being the first of a long line of experiments designed to solve the same problem, but with very different methods. It is the same idea that inspires Proudhon's Bank and Solvay's Complabilisme social.

The particular mechanism wherewith the elimination of profit was essayed is really of quite secondary importance. But the essential idea which lay behind the whole attempt—namely, the abolition of profit— is at least partly realized in that solid and useful institution which is now found all over the world, and which was bequeathed to us by this experiment of Owen's—the co-operative stores. Their first appearance dates from 1832, the year of the Bank of Exchange experiment, but it was not until ten years later that they assumed their present form as the outcome of the efforts of the Rochdale Pioneers.

The co-operative retail societies have as their rule either to make no profits or to restore any profit that may accrue to their members in proportion to the amount of their purchases at the stores. In reality there is no profit, but simply a cancelling of insurance against risks which has been shared in by all the members. The process of elimina­tion is strictly in accordance with Owen's method of putting producer and consumer in direct contact with one another with a view to getting rid of the middleman. But the elimination of profit is accomplished without eliminating money. That close relation which Owen and a number of other socialists believed to exist between money and profit is purely imaginary. We know as a matter of fact that the highest profits are to be got under the truck system, in the African equatorial trade, for example, where guns are exchanged at five times their value for caoutchouc reckoned at a third of its value, representing a profit of 1500 per cent. The employment of money has brought such definite-ness into the method of valuation that the rate of profit per unit on a yard of cloth, say, has become almost infinitesimal. Such exactness of calculation would have been impossible under either the truck or the labour note system.

The co-operative association, with its system of no profits, will for ever remain as Owen's most remarkable work, and his fame will for ever be linked with the growth of that movement. But he was hardly conscious of the important part which he was playing in the inauguration of the new movement. It is seldom that we meet with the word ' co-operation' in his writings, although that is not a matter of any great consequence, because the term at that time had not the signifi­cance which it has to-day, being then simply synonymous with com­munism. Not only was Owen unwilling to assume any parental responsibility for the co-operative society, his latest offspring, but he expressly refused to consider it as at all representative of his system. Shops of that description seemed to him little better than philanthropic institutions, quite unworthy of his great ideal. Before passing judgment upon him it is only fair to remember that since those early days the character of the co-operative stores has been completely changed. He lived to see the establishment of the Rochdale society, with its twenty-eight pioneers, six of whom were ardent disciples of Owen himself, and two of these, Charles Howarth and William Cooper, were the very soul of that immortal association. But Owen was by this time seventy-three years of age, and he scarcely realized that a child had been born to him. This somewhat late arrival was to perpetuate his name, and more than any of his other schemes was to save it from oblivion.

Owen had founded no school, unless of course we consider that the co-operators are deserving of the title. There were, however, a few disciples who attempted to apply his theories. One of these was William Thompson, whose writings, forgotten for many years, have recently come in for a good deal of extravagant praise. His principal work, AnInquiry into the Principles of the Distribution of Wealth, was published in 1824. As compared with Owen he reveals a greater depth of thought and shows a more thorough acquaintance with economic science, and he ought perhaps to be given premier place as the founder of socialism.

But, as we have pointed out in the Preface, we cannot readjust the judgment of history, and we are bound to accept the names which tradition has made sacred. And if a person's rank in history is to be measured by his influence rather than his talent, then Thompson's influence was nil, for at the time his work seems to have passed almost unnoticed.

We will only remark that Thompson's grasp of the idea that labour does not enjoy all it produces is much firmer than Owen's. This meant opening the way for a discussion of surplus value and unpro­ductive labour, of which more anon. He agrees with Owen in think­ing that expropriation would not remedy the evil, and he also would rather build up a new form of enterprise in which the worker would be able to retain for himself all the produce of his labour. This was precisely the co-operative ideal.