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Wealth and Want
... because democracy alone is not enough to produce widely shared prosperity.
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Services and Goods

Sometimes we have tendency to associate lower wages with services and higher wages with goods, or to think that manufacturing is superior to providing services to others. But the process of distributing goods is part of manufacturing, and it is the minute division of labor that permits us to specialize, to acquire the tools which make us efficient.

 

Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894)

The following chart classifies about every kind of wealth that man requires, and also "personal services," which, though as useful as wealth, do not crystallize in material products — such services as those of lawyers, barbers, doctors, teachers, actors, and so on: [chart]

The circle of variegated colors represents the commercial reservoir into which Wealth is poured by production, and from which it is drawn for consumption, each color typifying the kind of wealth or service named in it. Now, let us suppose that Personal Servants tap the commercial reservoir for food.70 They do it by applying at retail stores for what will relieve their poverty as to food, and food flows out to them" as indicated by the blue arrow, which we now insert in the chart: [chart]

Let us now complete this chart. When we began it a distinction was noted between Personal Servants, who render mere intangible services, and the other classes, who produce tangible wealth. But essentially there is no difference. By referring to the chart and observing the course of the arrows, Food-makers are seen working for Personal Servants precisely as Personal Servants work for Luxury-makers. We may therefore abandon the distinction. This makes it no longer necessary to mention particular classes of products in the chart; it is enough to distinguish the different kinds of labor.76 Thus: [chart]

76. "This, then, we may say is the great law which binds society — 'service for service.' "— Dick's Outlines, p. 9.

For simplicity the workers have been divided into great classes, and each class has been supposed to serve only one other class. But the actual currents of trade are much more complex. It would be practically impossible to follow them in detail, or to illustrate their particular movements in any simple way. And it is unnecessary. The principle illustrated in the chart is the principle of all division of labor and trade, however minute the details and intricate the movement; and any person of ordinary intelligence who wishes to understand will need only to grasp the principle as illustrated by the chart to be able to apply it to the experiences of everyday industrial life. All legitimate trade is the interchange of Labor for Labor.77

77. In the light of this principle how absurd are some of the explanations of hard times.

Overproduction! when an infinite variety of wants are unsatisfied which those who are in want are anxious and able to satisfy for one another. Hatters want bread, and bakers want hats, and farmers want both, and they all want machines, and machinists want bread and hats and machines, and so on without end. Yet while men are against their will in partial or complete idleness, their wants go unsatisfied! Since producers are also consumers, and production is governed by demand for consumption, there can be no real overproduction until demand ceases. The apparent overproduction which we see — overproduction relatively to "effective demand" — is in fact a congestion of some things due to an abnormal underproduction of other things, the underproduction being caused by obstructions in the way of labor.

Scarcity of capital! when makers of capital in all its forms are involuntarily idle. Scarcity of capital, like scarcity of money, is only an expression for lack of employment. But why should there be any lack of employment while men have unsatisfied wants which they can reciprocally satisfy?

Too much competition! when competition and freedom are the same. It is not freedom but restraint, not competition but protection, that obstructs the action and reaction of demand and supply which we have illustrated in the chart.

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... because democracy alone hasn't yet led to a society in which all can prosper