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Machinery, land, and other material factors still demand enormous outlays and give immediate returns, while investments in reforestation or in the improvement of laborers, for example, only bring their maximum returns after a full generation. But the semi-monopolistic capitalism of to-day is far richer than was its competitive predecessor.
In any event the plan of an automatically regulated recognition of semi-monopolistic corporations would be intended only as a transitional measure. Its object would be to give these somewhat novel industrial agents a more prolonged and thorough test than any they have yet received.
Net profits could be taxed at a rate which was graduated to the percentage paid; and beyond a certain point the tax should amount to much the larger fraction of the profits. In this way a semi-monopolistic corporation would not have any interest in seeking profits beyond a certain percentage.
The constructive idea behind a policy of the recognition of semi-monopolistic corporations, is, of course, the idea that they can be converted into economic agents which will make unequivocally for the national economic interest; and it is natural that in the beginning legislators should propose to accomplish this result by rigid and comprehensive official supervision.
The semi-monopolistic organization of certain American industries is little by little enabling the government to separate from the total economic product a part at least of that fraction which is created by social rather than individual activity; and a democracy which failed to take advantage of the opportunity would be blind to its fundamental interest.
It can constitute a system of taxation, in respect to the semi-monopolistic corporations, which would deprive them of the fruits of an excessively large margin between the cost of production and the price at which the product or service could be increasingly sold.
The foregoing plan, however, is not suggested as a final and entirely satisfactory method of incorporating semi-monopolistic business organizations into the economic system of a nationalizing democracy. I do not believe that any formula can be framed which will by the magic of some chemical process convert a purely selfish economic motive into an unqualified public economic benefit.
It is enough to point out that the unions managed to prevent wage reductions in the organized trades notwithstanding the unemployment and distress of 1907-1908. On the whole trade unionism held its own against employers in strictly competitive industry. Different, however, was the outcome in industries in which the number of employers had been reduced by monopolistic or semi-monopolistic mergers.
I shall not attempt to define any precise scale which would serve the purpose because the possible adoption of such a plan is still too remote; but the state should, in return for the protection it extends to these semi-monopolistic corporations, take a certain percentage of all profits, and, while this percentage should increase until it might at a certain level reach as much as one half or three quarters, it should not become larger than three quarters except in the case of a corporation earning, say, more than 20 per cent on its capital.
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