(How profits are made under the present industrial system and what becomes of them.) We have next to examine the structure of the capitalist order, basing our argument on facts which are admitted by everyone, including the most ardent defenders of the present system.
All men have to have certain material things which we describe as goods. As these goods do not produce themselves, it is necessary that some should work. The workers must have tools; also they must have access to the land and the sources of raw materials. These means of production are owned by some individuals in the community, and this ownership gives them power to direct the work of the rest. Those who own the land and the natural sources of wealth we call capitalists, or business men, and those who do not own these things, or whose share in them is insignificant, are the proletariat, or working class.
If you state to the average American that there is a capitalist class and a proletariat in this country, he will point out that many who are now members of the capitalist class were originally members of the proletariat; they have worked hard and saved, and accumulated property. But this is merely confusing the issue. The fact that some proletarians turn into capitalists and some capitalists into proletarians is important to the individuals concerned, but it does not alter the fact that there are two classes, capitalist and proletarian. Consider, by way of illustrating, a field with trees growing on it; we have earth, and we have trees, and the distinction between them is unmistakable. The roots of the trees go down into the earth, and take up portions of the earth and turn it into tree. The leaves and the dead branches fall, and in the course of time are turned once more to earth. There are all sorts of stages between earth and tree, and between tree and earth; but you would not therefore say that the word "earth" and the word "tree" are misnomers.
The working men go to the business man and apply for work. The business man gives them work, and takes their product, and offers it in the market at a price which allows him a profit above cost. If he can sell at a profit, he repeats the process, and the worker has a job. If he cannot sell at a profit, the worker is out of a job. Here and there may be a benevolent business man who, rather than turn his workers out of a job, will sell his goods at cost, or even for a short time at a loss; but if he keeps the factory going simply for the benefit of his workers, and with no expectation of ever making a profit, that is a form of charity, and not the common system under which our business is now carried on.
So it appears that the worker is dependent for his wages upon the ability of the business man to make a profit. The worker's life is inextricably bound up with the profit of the capitalist—no profit for the capitalist, no life for the worker. The capitalist, going out to look for markets for his goods, is seeking, not merely profit for himself, but life for his workers.
Now, the business man pays a certain percentage of his total receipts for labor, another percentage for raw materials, another percentage for his overhead charges, and the rest is profit in various forms, r............