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88 ON POLITICS, GOVERNl\rIENT, Al"lffi PACIFISM
possible scheme of human existence. If in what follows I write
as if I were sure of the truth of what I am saying, this is merely
done for the sake of an easier mode of expression; it does not
proceed from unwarranted self-confidence or a belief in the
infallibility of my somewhat simple intellectual conception of
problems which are in reality uncommonly complex.
As I see it, this crisis differs in character from past crises in
that it is based on an entirely new set of conditions, arising out
of the rapid progress in methods of production. Only a fraction
of the available human labor in the world is now needed for
the production of the total amount of consumption goods necessary
to life. Under a completely laissez-faire economic system,
this fact is bound to lead to unemployment.
For reasons which I do not propose to analyze here, the majority
of people are compelled to work for the minimum wage
on which life can be supported. If two factories produce the
same sort of goods, other things being equal, that factory will
be able to produce them more cheaply which employs fewer
workmen-i.e., makes the individual worker work as long and
as hard as human nature permits. From this it follows inevitably
that, with methods of production as they are today, only a portion
of the available labor can be used. While unreasonable demands
are made on this portion, the remainder is automatically
excluded from the process of production. This leads to a fall
in sales and profits. Businesses go smash, which further increases
unemployment and diminishes confidence in industrial concerns
and therewith public participation in the mediating
banks; finally the banks become insolvent through the sudden
withdrawal of accounts and the wheels of industry therewith
come to a complete standstill.
The crisis has also been attributed to other causes which we
will now consider.
Over-production. We have to distinguish between two things
here-real over-production and apparent over-production. By
real over-production I mean a production so great that it exceeds •
the demand. This may perhaps apply to motor cars and wheat
in the United States at the present moment, although even