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The idea that depression is due to "the profit system" as such, to "capitalistic exploitation" of labor, is one that seems to have captured almost completely the minds of our radical literary intelligentsia. The idea seems to be that "capitalistic exploitation" depresses wages while Increasing the Incomes of property owners, that therefore wage earners cannot buy the goods they work to produce, that in consequence the goods become unsaleable and that this Is the cause of business depression and unemployment.

Even if we grant that capital "exploits" the workers or that employers "exploit" employees or that any propertied class "exploits" other classes, this would not at all Indicate that unemployment or business depression la thus caused. For though I pick your pocket every week and so decrease your ability to buy goods and services, yet, for every dollar less that you have to spend, I have a dollar more to spend. The idea of the literary Intelligentsia that capitalist employers cannot sell as many dollars' worth of goods if wages are low and property incomes high as in the reverse situation, is pure assumption for which they never present real evidence. The fact is that the rich buy as well as the poor, that capitalist employers buy each others' products as readily as do wage earners. They may not, to be sure, buy the same things; but there is just as much employment in the malting of steam yachts and palatial residences as in the manufacture of work shoes and blue denim overalls.

But now our literary intelligentsia may reply -- as they sometimes do reply -- that the recipients of large incomes don't spend most of their money but save and invest it instead of spending! Very well. What is saving and investing? Isn't it buying things? Not buying steam yachts and cut flowers, perhaps, but buying brick, structural steel, machinery and trucks. And the making of these investment foods employs labor just as truly as the making of anything else. And if the recipients of the larger incomes buy the stocks and bonds of corporations, do not the corporations then spend, for machinery and buildings requiring labor to make, the money they so receive? Even if the stocks and bonds are purchased, not from the corporations that issue them but from previous holders, do not these previous holders expect to spend the money they so receive?

Driven from all these other defenseless positions, the intelligentsia resort to their last one. Is it not the case, they inquire, that such saving and investment must increase the output of goods beyond the possibility of disposing of them?

But here, too, their position is untenable. Saving, and the consequent increase of capital, means more competition to get capital used and, therefore, lower interest rates. It means that business can afford to operate on a narrower margin. It means that labor is better equipped with capital, is able to produce more, and is therefore worth more in wages (unless the crowding of land -- as from land speculation -- causes the gain to go to landowners in higher rents). And if wages are not higher, then competition of capital will make prices lower. In short, the natural and normal result of increased saving, investment and capital construction, is to increase the buying ability of the very classes to whose lack of buying ability the intelligentsia attribute our depressions! If we have depressions this is not because some have small incomes and others large incomes, however undesirable such inequality, if based on unjust Institutions, may be. It is not because of excessive saving. It is not because of the construction of too much capital; for capital is a tool that aids us to produce more of what we want and with less effort; and, in general, men are still eager to get the use of capital and are willing to pay to use it.

It is a pity that such mental confusion as has been described above, afflicts so many of those who appear to be sympathetic with common folks and who might do something toward popularizing real reform. Or are many of the literary intelligentsia so dependent for a livelihood on their skill in playing up fallacies that are widely believed In by their public, and in brightly toying with a rapid succession of new ideas, that they think they cannot afford to, and perhaps do not seriously desire to, do anything else?

Sharp and persistent decrease of hank credit (or other circulating medium) makes for an apparent superfluity of goods and labor because there is not enough circulating medium to buy them at current prices and wages, and many prices and wages do not quickly and easily adjust themselves to a lower level. But such apparent superfluity can be largely prevented by wise and skillful control of the volume of money and bank credit.

Tariff restrictions lessen the possibilities of profitable specialization, and make the goods we want and need cost us more labor to get, so that we can't enjoy so much. Removal of tariff barriers is the obvious solution.

Private monopoly exploits the consuming public through exorbitant prices. The solution here is to enforce competition, and this is certainly possible if those in the executive, legislative and judicial branches of our government believe in doing it and really try to do it. In the case of the public service industries, where the use of a single plant is manifestly desirable, the solution is effective and fair regulation of rates.

Private enjoyment of the billions of dollars a year of community-produced site values and natural resource values, compels the raising of the revenues required by government, toy taxing the earnings of labor and the necessities of the poor and by penalizing thrift and improvement. It makes the sale prices of land high and discourages home ownership. It encourages the speculative holding of land out of use, makes available land scarce and its rent high and crowds people into slums where all the conditions of life are unfavorable and hard. The obvious solution is certainly not to prate of the evils of "the profit motive" which in so many ways is a benefit to us and a stimulus to progress, and which actuates every wage earner when he gives up a poorer job for a better one, just as truly as it does his boss or any capitalist investor. The solution is for the public to take, through taxation, all or nearly all of the annual rental value of land and sites.

But this proposal is THE SUBJECT OF THE GREAT SILENCE. It isn't "good form" to discuss it "in the best circles." The literary intelligentsia rarely or never mention it. The high-brow magazines to which they contribute may use their columns for everything and anything else but they won't refer to this. But perhaps the time will come when they will have to refer to it -- and take it seriously, too -- or find themselves under permanent and withering suspicion of covering a fundamental conservatism with a cloak of' pretended and unenlightening liberalism.