To answer that question, we must first look at a little history.
In the pre-capitalistic ages, a nation's social order and economic system were based upon the military superiority of an elite.
The victorious conqueror appropriated to himself all the country's utilizable land, retained
the part for himself and distributed the rest among his retinue. Some got more, others less
and the great majority nothing. In the England of the early Plantagenets, a Saxon was right
I am poor because there are normals to whom more was given than is needed for the support of their families.
In those days the affluence of the rich was the cause of the poverty of the poor.
Conditions in a capitalistic society are different.
are different. In the market economy, the only way left to the more gifted individuals
to take advantage of their superior abilities is to serve the masses of their fellow men.
Profits go to those who succeed in filling the most urgent of the not yet satisfied wants
The Profits Saved, Accumulated and Ploughed Back into the Plant Benefit the Common Man
Twice.
First, in his capacity as a wage earner, activity of labor, and thereby real wage rates, fine
jobs.
Capacity as a consumer, when the product, the additional capital, are the lowest possible prices.
The characteristic principle of capitalism is that it is mass production to supply the masses.
Big business serves the many.
Those outfits that are producing for the special tastes of the rich never outgrow medium or even small size.
Under such conditions, those anxious to get a joint interest in the prosperity of the business enterprises.
For only the prosperous firm or corporation has the opportunity to invest,
That is, to expand and to improve its activities by the employment of ever better and more
efficient tools and machines.
The better equipped the plant is, the more can the individual worker produce within a
unit of time.
The higher is what the economist called the marginal productivity of his labor, and thereby
The Real Wages He Gets
The fundamental difference between the conditions of an economically underdeveloped country
like India and those of the United States is that in India the per headquarter of capital
invested and thereby the marginal productivity of labor and consequently wage rates are much
lower than in this country.
The capital of the capitalist benefits not only those who own it, but also those who
work in the plant and those who buy and consume the goods produced.
And then there is one very important fact to keep in mind.
When, as we did in the preceding observations, one distinguishes between the concerns of
of the Capitalists and those of the people employed in the plants owned by the capitalists.
One must not forget that this is a simplification that does not correctly describe the real
state of present-day American affairs. For the typical American wage earner is not penniless.
He is a saver and investor. He owns savings accounts, United States savings bonds and other
bonds and first of all insurance policies. But he is also a stockholder. At the end of
Since the last year, the accumulated personal savings reach $338 billion. A considerable
part of this sum is lent to business by the banks, savings banks and insurance companies.
Thus, the average American household owns well over $6,000 that are invested in American
and Business. The typical family stake in the flourishing of the nation's business enterprises
consists not only in the fact that these firms and corporations are employing the head of
the family. There is a second fact that counts for them to wit, that the principal and interest
of their savings are saved only as far as the American free enterprise is in good shape
and Prosperity. It is a myth that there prevails a conflict between the interests of the corporations
and firms and those of the people employed by them. In fact, good profits and high real
wages were hanged in hand.