The Social Function of Mr. Henry Ford
Our Ideal Should Be More Business Methods in Government
NOVEMBER 01, 1996
Spencer Heath (1876-1963) was a pioneer in aviation manufacturing and the author of Citadel, Market and Altar: Emerging Society. His grandson Spencer Heath McCallum found this letter in the course of cataloguing his grandfather’s writings for the Institute for Humane Studies.
Miss Thompson was a well-known journalist whose column, “On the Record,” appeared in the Herald Tribune three days a week, alternating with Walter Lippmann’s column.
April 19, 1937
c/o The New York Herald Tribune
230 West 41st Street, New York City
Dear Miss Thompson:
Mr. Ford is a great administrator of a great service organization. It is his social function to own and thereby to administer vast productive properties which consist in (1) materials in process of having services incorporated in them and (2) facilities, such as buildings, machinery, and tools, wherewith to work upon the materials and build into them the values that arise and are measured at the points of exchange and thence transformed into satisfactions.
In order to give socially creative administration to all this capital—these moving and these fixed properties—Mr. Ford calls to his aid many persons having specific training, skills, and capacities. All these persons enter into a contractual relation with him that guarantees to them compensations for their services (wages and salaries) so certain and definite that they are a first lien on everything that he has or owns. And if those wages and salaries are higher than in other organizations it is only because under Mr. Ford’s superior administration and supervision these numerous subordinate persons can create, jointly with him, more of service, of value, and of satisfactions to the public and to themselves than in any other employment or occupation. This is what holds his organization together—the superior creation of wealth and services under his administration and supervision. This is what socializes his business, keeps it on a basis of voluntary and mutual service, with ascending values, as between all the persons or interests cooperating and serving each other.
Look at how this carries on. His subordinates give him specific supervised services. He gives to them the supervision, discipline, if you wish, without which their various services cannot be creatively coordinated. He puts materials into their hands and provides them with marvelous facilities wherewith to work upon these materials, building potential values and satisfactions into them. And beyond giving the service of supervision to his subordinates he also must administer all the capital, the physical things, that he puts into their hands. This administration extends not alone to disposition and guidance of the facilities and materials used and worked on by them but also to merchandising of the moving capital into money or credits for redistribution—chiefly, among his subordinates as wages and salaries; secondarily, back into his productive properties as extension of capital; and lastly, to his own personal use and subsistence, and this last is probably smaller than that of many of his employees.
While in performing all these services Mr. Ford must supervise his subordinates, he himself is under a sharper and severer discipline. They can suffer no penalty beyond loss of further association of effort with him. In no case can they lose anything that they have already created or accumulated or otherwise own. But Mr. Ford, if his services are not well performed, must lose not only all further cooperation from them but must, if need be, forfeit the last dollar’s worth that he has accumulated for a lifetime in his business, even including anything he may have set aside for his own personal use and subsistence. In short, if he fails creatively (profitably) to perform his supervisory and administrative services and to meet his administrative responsibilities his business becomes automatically liquidated, he loses all his property and on top of all this he is separated from further employment in the enterprise as completely and more irrevocably than he might have dismissed a former employee from under his supervision.
Now, Miss Thompson, is Mr. Ford and his work a social disease to be eradicated or is it a manifestation of the healthy functioning of social forces? What heavier responsibilities should fall upon him, what sharper discipline does he merit than he already has? What legal shackles can you imagine or suggest that might increase the volume or the value of the work he now so eminently performs, despite the political restraints and restrictions that are weighing so many down? Should he be set free, nationally and internationally, to extend more widely the scope and range of the voluntary obligations and responsibilities he has so far well met or should he be coerced and bludgeoned (democratically or otherwise) into a further subservience to politicians (public servants?) and the political creditors to whom they owe or hope for a continuance of their present office and power? Why not reduce Mr. Ford and all such as he who bear administrative responsibilities to the status of yes-men under the brute power of public officers with guns and jails and political obligations—and good intentions?
The answer is because, unlike Mr. Ford’s business, the public business is not organized, not socialized into an efficient service. It has no department of administration and supervision functioning as such; no owners or responsible administrators of the public properties, no supervisors of the public servants. The public servants are all non-administrative, all wage or salary workers. They are like a horde, under no creative discipline or supervision to restrain their rapacity or their destructive benevolence and their leaders are under no obligation but that of all despots—to do anything that they think necessary to maintain office or otherwise to wield physical power. This is why, unlike Mr. Ford and his organization, they do not create social values but destroy them. This is why they discourage production and create deficits where Mr. Ford and his kind build abundance and profits and sound social values. Mr. Ford does not employ violence or coercion or seek to have government use it on his behalf. He has become socialized. All his dealings with others (except politicians and mob masters) are noncoercive and voluntary on both sides. He practices, so far as he is not coerced, the true democracy of the marketplace where men come together and from time to time call out their wishes and desires as to the exchange ratios between the services and commodities they exchange with and confer upon each other. Here is the democratic process, the basic social process of exchange (as opposed to seizures and enslavement) from which all values arise.
Now look at the technique of the politicians, the public servants (save the mark). They and only they are given the power to take without exchange, to compel without consent. Once the leaders, the Ali Babas, have grasped political power or wheedled it from a harried electorate they become exempt from the democracy of the market. They become anti-social because force and seizure, and not exchange, become their basic technique. Benevolence may be their will but violence is their only instrument. Everything they receive is taken by seizure of taxes out of socially created values and penalization of social processes. All that they give to their special beneficiaries and mass protégés (to hold their political support) they must first take in the same manner and from the same source.
Of course, all this ought not to be. The acceptance and practice of socialized instead of anti-social methods in public business is long overdue. But until the better methods are discovered and applied let me ask you, Miss Thompson, can it be that you are in favor of reducing Mr. Ford’s business to the anti-social level of political operation or control?
When Mr. Ford enters a market for materials or for labor to be combined with his own and accumulated in those materials or when he goes there for greater capital equipment to facilitate this process or to dispose of his finished goods or services where there is most need and demand for them or when he practices that great supervision over his associates without which their labor would be of little avail, would you have him shackled to an enforcement officer of compulsory and prohibitory laws in order to improve his functioning as a creator of social values and abundance? And you who believe in brute dominance over social creators (only so it be under democratic forms) support statutory enactments creating crimes—making it criminal for an employer to dismiss an employee or fail to re-employ him at the expiration of his day by day or week by week contract. And then the High Court lays the crime, the gravamen, not in the dismissal but in the reasons for it. The same act is to be lawful or criminal, depending upon what the defendant can be accused of holding in his mind. Where are all the safeguards of ancient law against punishments for psychological crimes? Let any worker (so-called) but conspire against the employer whom he has promised to serve and combine with others to oust him from his properties and by violence and otherwise prevent the operation of his business, then such employee must be sacrosanct against dismissal and therefore against every other discipline. Even Satan in revolt did not hurl his Chief over the battlements and sit down upon the celestial properties.
But you seem to think Mr. Ford is an economic royalist, an industrial King John, and labor must have its Magna Charta. When has he, like John, betrayed all and served none? When, indeed, has he seized the persons and properties of his employees? Must he, like King John, be forced to sign a bond and pledge to discontinue such acts? These are the violences and violations of despotic kings and their political descendants, the demagogues and politicians. They are the acts of political, not of social and industrial servants, like Mr. Ford. For he indeed is a servant of his entire nation and of much of the world.
From one like you, Miss Thompson, with your admirable earnestness and honesty of mind and heart, it is fit that gratitude should arise to men like Mr. Ford who have socialized their energies into wealth and comfort for their fellow men. Rather should you wish to deliver them out of the hands of the politicians, of ruthless King Demos and his demagogues whose present-day seizures of property far exceed anything even attempted by the villainous King John. Let us not have Mr. Ford and his employees desocialized out of live service to the public and into dead subservience to politicians. Let us take more thought how it may be possible to socialize the politicians, the government, into an agency of public service by curtailing their perquisite of seizure and thereby bringing them under non-political discipline and supervision and bringing the public property, like Mr. Ford’s properties, under responsible, profitable, and revenue-producing administration. Government can be socialized. The creative principle in nature conspires towards this. Let us open our eyes to those forms of social organization in business that build and create. Let their providence and their beauty inspire us to extend them beyond the industrial and commercial even into the political realm. Let our ideal be less seizures and more of exchange, less government methods in business and more business methods in government.