Communism and Freedom of Choice
The usual analysis of the wastes involved in the competitive pursuit of profits does not dig deep enough to uncover this fundamental fact. 'The chief wastes dealt with by socialists,' says Harry W. Laidler, 'are generally those connected with the distribution of commodities. Competition demands the expenditure of enormous sums in securing a market... In the printing trades, a considerable portion of workers, ranking in the census as engaged in production, are busy at printing "not books, or newspapers, or magazines; but advertising matter, competitive price lists, wrappers, trade labels, bill-heads, account books, posters, etc., which are merely called into existence by the struggle of various competitive sellers to reach the consumer," and which could largely be eliminated under a coöperative system of industry. Much of this matter is misleading; some of it, issued for the purpose of deceiving. The reader must pay the price.' Such indictments of the capitalist system are superficial. They go far enough to uncover competition for the consumer's dollar as a cause of wastes, but they do not go far enough to uncover the consumer's freedom of choice as the cause of competition.
As a matter of fact, this rivalry among profit-seekers in the race for the consumer's dollar is called forth because of the consumer's three options in the use of his dollar. There are many ways in which these so-called 'wastes' could be reduced; but there is only one way in which they could be eliminated; namely, by eliminating consumers' freedom of choice. Admittedly, the cost of distributing regulation army supplies is small. No efforts are wasted in persuading the individual soldier to choose this style of hat or that kind of breakfast food; for he has no choice. Collar manufacturers do not court the soldier trade until the army is demobilized. Provided we were all willing, under a system of communism, to accept whatever the State produced and allotted to us, or provided we were willing and able, under a price and profit system, to buy, at Government-fixed prices, whatever the State produced, we could do away with some of the present vast costs of distribution.
Communism abolishes Profits by abolishing Freedom of Choice
Communism does, indeed, abolish the 'wastes' of distribution under a competitive system along with individual profit, but only because it abolishes individual freedom of choice. The communistic State decides what is good for everybody and undertakes to supply each citizen with the 'standard' requirements. There is no risk due to changing wants, for the individual gets what is allotted to him, whether he wants it or not. In like manner the directors of the New York Foundling Society can decide in December on the clothes, lodgings, even the names that are to be assigned to all the abandoned children that will be found on doorsteps during the following year. The children are not consulted. If all members of society would turn themselves over to the care of a board of directors, and accept whatever was allotted to them, it would be possible to organize industry on some other than a profit and loss basis.
Under the competitive system, we are told, consumers must pay for all the costly advertising. In such general terms, this is merely a truism. All human beings are consumers; there is nobody else to pay the costs of advertising or any other costs. But this charge against a profit economy, though in general valid, often involves the unwarranted assumption that the individual producer or distributor can incur whatever advertising costs he pleases, add these costs to the price of his product, and collect them from buyers who have no option in the matter.
Thus the business man's inescapable risk is ignored, all because the crux of the situation -- the fact that consumers hold most of the options -- is not taken into account. The consumers themselves decide, in the process of exercising their options, what advertising they will pay for. When they refuse to pay, those who have advanced the money are not reimbursed. And consumers are constantly making the refusal. Every year they decide that thousands of advertising concerns shall not collect enough in sales to cover the money they have advanced in attempts to influence choice. The consumers are the court of last resort: there is no appeal from their decision.
We must not overlook the fact, moreover, that these efforts of competitors to sell their goods are properly called 'wastes' only if the privilege of choosing among competing products, and the improvement in the products themselves that results from this competition, are not worth paying for. How much they are worth is a question we shall consider presently. Here we seek only to emphasize the fact that the consumer's freedom of choice, which is the chief business risk, and therefore the chief cause of business profits and losses, is also the chief cause of the high costs of distribution.
This, then, is the gist of the matter: Somebody must determine what goods are to be produced. The decision must rest either with the Government or with consumers. As society is now organized, consumers decide. The only way they can make their decisions effective is through exercising their freedom of choice in the ordinary course of marketing. This freedom of choice constitutes the chief risk of business, and gives rise inevitably to profits and losses.