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If only the man himself were concerned, the cost of his maintenance and the profit he ought to have would be a simple matter. But he is not just an individual. He is a citizen, contributing to the welfare of the nation. He is a householder. He is perhaps a father with children who must be reared to usefulness on what he is able to earn. We must reckon with all these facts. How are you going to figure the contribution of the home to the day’s work? You pay the man for his work, but how much does that work owe to his home? How much to his position as a citizen? How much to his position as a father? The man does the work in the shop, but his wife does the work in the home. The shop must pay them both. On what system of figuring is the home going to find its place on the cost sheets of the day’s work? Is the man’s own livelihood to be regarded as the “cost”? And is his ability to have a home and family the “profit”? Is the profit on a day’s work to be computed on a cash basis only, measured by the amount a man has left over after his own and his family’s wants are all supplied? Or are all these relationships to be considered strictly under head of cost, and the profit to be computed entirely outside of them? That is, after having supported himself and family, clothed them, housed them, educated them, given them the privileges incident to their standard of living, ought there to be provision made for still something more in the way of savings profit? And are all properly chargeable to the day’s work? I think they are (put in bold type by the authors). Otherwise, we have the hideous prospect of little children and their mothers being forced out to work[102].
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County-wide high wages <in comparison with the given price of products which are consumed by people> level spell country-wide prosperity, provided, however, the higher wages are paid for higher production.
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In this first plan the standards insisted upon were not petty — although sometimes they may have been administered in a petty fashion. We had about fifty investigators in the Social Department; the standard of common sense among them was very high indeed, but it is impossible to assemble fifty men equally endowed with common sense. They erred at times — one always hears about the errors. It was expected that in order to receive the bonus married men should live with and take proper care of their families. We had to break up the evil custom among many of the foreign workers of taking in boarders — of regarding their homes as something to make money out of rather than as a place to live in. Boys under eighteen received a bonus if they supported the next of kin. Single men who lived wholesomely shared (put in bold type by the authors: in essence H. Ford financed the moral and healthy way of living). The best evidence that the plan was essentially beneficial is the record. When the plan went into effect, 60 per cent. of the workers immediately qualified to share; at the end of six months 78 per cent. were sharing, and at the end of one year 87 per cent. Within a year and one half only a fraction of one per cent failed to share» (Ch. 8. “Wages”).
In other words, Ford introduced an 8-hour working day and secured payment by the hour at his plants and railway. He kept perfecting his business drawing on this organizational scheme and paid out bonuses to the whole staff out of the profits gained from those improvements. His system of bonus payments consisted in financially encouraging (remunerating) conscientious work and beneficial initiative. And this system was aimed at ensuring the collective’s welfare and satisfying the society’s demand for the manufactured products, not on satisfying the insatiable greed of investors who constitute the minority in the society. H. Ford says the following on that subject:
«Our profit, because of the rapidity of the turnover in the business and the great volume of sales, has, no matter what the price at which the product was sold, always been large. We have had a small profit per article but a large aggregate profit. The profit is not constant. After cutting the prices <this was Ford’s social and economic strategy[103]>, the profits for a time run low, but then the inevitable economies begin to get in their work and the profits go high again. But they are not distributed as dividends. I have always insisted on the payment of small dividends and the company <i.e. «Ford Motors»> has today no stockholders who wanted a different policy[104]. I regard business profits above a small percentage as belonging more to the business than to the stockholders.
The stockholders, to my way of thinking, ought to be only those who are active in the business and who will regard the company as an instrument of service rather than as a machine for making money. If large profits are made — and working to serve forces them to be large — then they should be in part turned back into the business so that it may be still better fitted to serve, and in part passed on to the purchaser (put in bold type by the authors). During one year our profits were so much larger than we expected them to be that we voluntarily returned fifty dollars to each purchaser of a car. We felt that unwittingly we had overcharged the purchaser by that much. My price policy and hence my financial policy came up in a suit brought against the company several years ago to compel the payment of larger dividends. On the witness stand I gave the policy then in force and which is still in force. It is this:
In the first place, I hold that it is better to sell a large number of cars at a reasonably small margin than to sell fewer cars at a large margin of profit. I hold this because it enables a large number of people to buy and enjoy the use of a car and because it gives a larger number of men employment at good wages. Those are aims I have in life. But I would not be counted a success; I would be, in fact, a flat failure if I could not accomplish that and at the same time make a fair amount of profit for myself and the men associated with me in business.
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Profits belong in three places: they belong to the business — to keep it steady, progressive, and sound. They belong to the men who helped produce them. And they belong also, in part, to the public. A successful business is profitable to all three of these interests — planner, producer, and purchaser.
People whose profits are excessive when measured by any sound standard should be the first to cut prices. But they never are. They pass all their extra costs down the line until the whole burden is borne by the consumer; and besides doing that, they charge the consumer a percentage on the increased charges. Their whole business philosophy is: «Get while the getting is good». They are the speculators, the exploiters, the no-good element that is always injuring legitimate business. There is nothing to be expected from them. They have no vision. They cannot see beyond their own cash registers.
These people can talk more easily about a 10 or 20 per cent. cut in wages than they can about a 10 or 20 per cent cut in profits. But a business man, surveying the whole community in all its interests and wishing to serve that community, ought to be able to make his contribution to stability (put in bold type by the authors)» (Ch. 11. “Money and Goods”).
Now let us again turn to J. Stalin. Having come out with his understanding of the fundamental economic law of the historically real capitalism (the understanding we quoted in the beginning of Chapter 4.3), a few paragraphs further in the text of “Economic Problems of Socialism in the U.S.S.R.” Stalin gives the definition of the fundamental economic law of socialism: