Socialism: An Economic and Sociological Analysis

Section II. The Foreign Relations of a Socialist Community

CHAPTER 12

National Socialism and World Socialism

1 The Spatial Extent of the Socialist Community

Early Socialism is marked by its predilection for a return to the simpler modes of production of primitive times. Its ideal is the self-sufficing village, or, at most, the self-sufficing province—a town around which a number of villages are grouped. Being averse to all trade and commerce, its protagonists regard foreign trade as something entirely evil which must be abolished. Foreign Trade introduces superfluous commodities into the country. Since it was once possible to do without them, it is obvious that they are unnecessary, and that only the extreme ease with which they can be procured is responsible for the unnecessary expenditure upon them. Foreign Trade undermines morality and introduces foreign ideas and customs. In Utopia the stoic ideal of self-mastery was transmuted into the economic ideal of self-sufficiency. Plutarch found it an admirable thing in Lycurgusan Sparta—as romantically conceived in his day—that no merchant ship ever entered her harbours.*1

This attachment to the ideal of economic self-sufficiency, and their complete incapacity to understand the nature of trade and commerce, led the Utopians to overlook the problem of the territorial limits of the ideal state. Whether the borders of fairyland are to be wider or narrower in extent does not enter into their considerations. In the tiniest village there is space enough to realize their plans. In this way it was possible to think of realizing Utopia tentatively in small instalments. Owen founded the New Harmony community in Indiana. Cabet founded a small Icaria in Texas. Considerant founded a model phalanstery in the same state. "Duodecimo editions of the New Jerusalem," jeers the Communist Manifesto.

It was only gradually that socialists came to perceive that the self-sufficiency of a small area could provide no foundation for Socialism. Thompson, a disciple of Owen, remarked that the realization of equality among the members of one community was far from signifying the realization of equality between the members of different communities. Under the influence of this discovery, he turned to centralized Socialism.*2 Saint-Simon and his school were thorough centralizers. Pecqueur's schemes of reform claimed to be national and universal.*3

Thus emerges a problem peculiar to Socialism. Can Socialism exist within limited areas of the earth's surface? Or is it necessary that the entire inhabited world should constitute a unitary socialistic community?

2 Marxian Treatment of this Problem

For the Marxian, there can be only one solution of this problem—the ecumenical solution.

Marxism, indeed, proceeds from the assumption that by an inner necessity, Capitalism has already set its mark upon the whole world. Even to-day Capitalism is not limited to a single nation or to a small group of nations. Even today it is international and cosmopolitan. "Instead of the old local and national isolation and self-sufficiency, world trade has developed and the interdependence of nations." The cheapness of their commodities is the "heavy artillery" of the bourgeoisie. With the aid of this it compels all nations, on pain of extinction, to adopt bourgeois methods of production. "It forces them to adopt so-called civilization, i.e. to become bourgeois. In a word, it creates a world after its own image." And this is true not only of material but also of intellectual production. "The intellectual productions of one nation become the common property of all. National narrowness and exclusiveness become daily more impossible, and out of the many national and local literatures a world literature arises."*4

It follows, therefore, from the logic of the materialist interpretation of history that Socialism too can be no national, but only an international phenomenon. It is a phase not merely in the history of a single nation, but in the history of the whole human race. In the logic of Marxism the question whether this or that nation is "ripe" for Socialism cannot even be asked. Capitalism makes the world ripe for Socialism, not a single nation or a single industry. The expropriators, through whose expropriation the last step towards Socialism must be taken, must not be conceived save as major capitalists whose capital is invested throughout the whole world. For the Marxian, therefore, the socialistic experiments of the "Utopians" are just as senseless as Bismarck's facetious proposal to introduce Socialism experimentally into one of the Polish districts of the Prussian State.*5 Socialism is an historical process. It cannot be tested in a retort or anticipated in miniature. For the Marxian, therefore, the problem of the autarky of a socialist community cannot even arise. The only socialist community he can conceive comprehends the entire human race and the entire surface of the globe. For him the economic administration of the world must be unitary.

Later Marxians have, indeed, recognized that, at any rate for a time, the existence of many independent socialist communities side by side must be anticipated.*6 But, once this is conceded one must go further and also take into account the possibility of one or more socialist communities existing within a world which, for the most part, is still capitalistic.

3 Liberalism and the Problem of the Frontiers

When Marx and, with him, the majority of recent writers on Socialism consider Socialism only as realized in a unitary world state, they overlook powerful forces that work against economic unification.

The levity with which they dispose of all these problems may not unreasonably be attributed to what, as we shall see, was an entirely unjustifiable acceptance of an attitude with regard to the future political organization of the world, which was prevalent at the time when Marxism was taking form.

At that time, liberals held that all regional and national divisions could be regarded as political atavisms. The liberal doctrine of free trade and protection had been propounded—irrefutable for all time. It had been shown that all limitations on trade were to the disadvantage of all concerned: and, arguing from this, it had been attempted with success to limit the functions of the state to the production of security. For Liberalism the problem of the frontiers of the state does not arise. If the functions of the state are limited to the protection of life and property against murder and theft, it is no longer of any account to whom this or that land belongs. Whether the state extended over a wider or a narrower territory, seemed a matter of indifference to an age which was shattering tariff barriers and assimilating the legal and administrative systems of single states to a common form. In the middle of the nineteenth century, optimistic liberals could regard the idea of a League of Nations, a true world-state, as practicable in the not too far distant future.

The liberals did not sufficiently consider that greatest of hindrances to the development of universal free trade—the problem of races and nationalities. But the socialists overlooked completely that this constituted an infinitely greater hindrance to the development of a socialistic society. Their incapacity to go beyond Ricardo in all matters of economics, and their complete failure to understand all questions of nationalism, made it impossible for them even to conceive this problem.

CHAPTER 13

The Problem of Migration Under Socialism

1 Migration and Differences in National Conditions

If trade were completely free, production would only take place under the most suitable conditions. Raw materials would be produced in those parts which, taking everything into account, would yield the highest product. Manufacture would be localized where the transport charges, including those necessary to place the commodities in the hands of the ultimate consumer, were at a minimum. As labour settles around the centres of production, the geographical distribution of population would necessarily adapt itself to the natural conditions of production.

Natural conditions, however, are unchanging only in a stationary economic system. The forces of change are continually transforming them. In a changing economy men migrate continually from the places where conditions are less favourable to places where they are more favourable for production. Under Capitalism the stress of competition tends to direct labour and capital to the most suitable places. In a closed socialist community the same result would have to be achieved by administrative decree. In both cases the principle would be the same: men would have to go where the conditions of life were most favourable.*7

These migrations have the closest bearing upon the condition of the different nations. They cause citizens of one nation, the natural conditions of which are less favourable, to move into the territory of other nations more favourably endowed. If the conditions under which migration takes place are such that the immigrants are assimilated to their new surroundings then the nation from which they came is, to that extent, weakened in numbers. If they are such that the immigrants preserve their nationality in their new home—still more if they assimilate the original inhabitants—then the nation receiving them will find immigration a menace to its national position.

To be a member of a national minority involves multitudinous political disadvantages.*8 The wider the functions of the political authority the more burdensome are these disadvantages. They are smallest in the state which is founded upon purely liberal principles. They are greatest in the state which is founded upon Socialism. The more they are felt, the greater become the efforts of each nation to protect its members from the fate of belonging to a national minority. To wax in numbers, to be a majority in rich and extensive territories these become highly desirable political aims. But this is nothing but Imperialism.*9 In the last decades of the nineteenth century, and the first decades of the twentieth, the favourite weapons of Imperialism were commercial weapons—protective tariffs, prohibitions of imports, premiums on exports, freight discriminations, and the like. Less attention was paid to the use of another powerful imperialistic weapon—limitations on emigration and immigration. This is becoming more significant now. The ultima ratio of imperialism is, however, war. Beside war, all other weapons that it may use appear merely insufficient auxiliaries.

Nothing justifies us in assuming that under Socialism the disadvantages of belonging to a national minority would be diminished. On the contrary. The more the individual depended on the State—the more importance political decisions had for the life of the individual—the more would the national minority feel the political impotence to which it was condemned.

But when we are considering migration under Socialism we need not give special attention to the friction which would arise thereform between nations. For under Socialism there must arise, even between members of one and the same nation, points of difference which make the division of the surface of the earth—which is a matter of indifference to Liberalism—a problem of cardinal importance.

2 The Tendency Towards Decentralization Under Socialism

Under Capitalism, capital and labour move until marginal utilities are everywhere equal. Equilibrium is attained when the marginal productivity of all capital and labour is the same.

Let us leave the movement of capital on one side and consider first the movement of labour. The migrating workers depress the marginal productivity of labour wherever they betake themselves. The fact that wages, their income, sink, directly damages the workers who were employed in centres of migration before the incursion of new workers took place. They regard the "immigrants" as the enemy of high wages. The particular interest would be served by a prohibition of "immigration." It becomes a cardinal point of the particularist policy of all such particular groups of workers to keep newcomers out.

It has been the task of Liberalism to show who bear the costs of such a policy. The first to be injured are the workers in the less favourably situated centres of production, who, on account of the lower marginal productivity of their labour in those centres, have to content themselves with lower wages. At the same time, the owners of the more favourably situated means of production suffer through not being able to obtain the product which they might obtain could they employ a larger number of workers. But this is not the end of the matter. A system that protects the immediate interests of particular groups limits productivity in general and, in the end, injures everybody—even those whom it began by favouring. How protection finally affects the individual, whether he gains or loses, compared with what he would have got under complete freedom of trade, depends on the degrees of protection to him and to others. Although, under protection, the total produce is lower than it would have been under free trade, so that the average income is necessarily lower, it is still quite possible that certain individuals may do better than they would under free trade. The greater the protection afforded to particular interests, the greater the damage to the community as a whole, and to that extent the smaller the probability that single individuals gain thereby more than they lose.

As soon as it is possible to forward private interests in this way and to obtain special privileges, a struggle for pre-eminence breaks out among those interested. Each tries to get the better of the other. Each tries to get more privileges so as to reap the greater private gain. The idea of perfectly equal protection for all is the fantasy of an ill-thought out theory. For, if all particular interests were equally protected, nobody would reap any advantage: the only result would be that all would feel the disadvantage of the curtailment of productivity equally. Only the hope of obtaining for himself a degree of protection, which will benefit him as compared with the less protected, makes protection attractive to the individual. It is always demanded by those who have the power to acquire and preserve especial privileges for themselves.

In exposing the effects of protection, Liberalism broke the aggressive power of particular interests. It now became obvious that, at best, only a few could gain absolutely by protection and privileges and that the great majority must inevitably lose. This demonstration deprived such systems of the support of the masses. Privilege fell because it lost popularity.

In order to rehabilitate protection, it was necessary to destroy Liberalism. This was attempted by a double attack: an attack from the point of view of nationalism, and an attack from the point of view of those special interests of the middle and working classes which were menaced by Capitalism. The one served to mature the movement towards territorial exclusiveness, the other the growth of special privileges for such employers and workmen as are not equal to the stress of competition. Once Liberalism has been completely vanquished, however, and no longer menaces the protective system, there remains nothing to oppose the extension of particular privilege. It was long thought that territorial protection was limited to national areas, that the re-imposition of internal tariffs, limitation of internal migration, and so on, was no longer conceivable. And this is certainly true so long as any regard at all is preserved for Liberalism. But, during the war, even this was abandoned in Germany and Austria, and there sprang up overnight all kinds of regional barriers. In order to secure a lower cost of living for their own population, the districts producing a surplus of agricultural produce cut themselves off from the districts that could support their population only by importing foodstuffs. The cities and industrial areas limited immigration in order to counteract the rise in the price of foodstuffs and rents. Regional particularism broke up that unity of economic area on which national neo-mercantilism had based all its plans.

Even granting that Socialism is at all practicable, the development of a unitary world socialism would encounter grave difficulties. It is quite possible that the workers in particular districts, or particular concerns, or particular factories, would take the view that the instruments of production which happened to lie within their area were their own property, and that no outsider was entitled to profit by them. In such a case World Socialism would split up into numerous self-independent socialist communities—if, indeed, it did not become completely syndicalized. For Syndicalism is nothing less than the principle of decentralization consistently applied.

CHAPTER 14

Foreign Trade Under Socialism

1 Autarky and Socialism

A socialist community, which did not include the whole of mankind, would have no reason to remain isolated from the rest of the world. It is true, that it might be disquieting for the rulers of such a state that foreign ideas would come over the frontiers with foreign products. They might fear for the permanence of their system, if their subjects were able to compare their position with that of foreigners who were not citizens of a socialist community. But these are political considerations, and do not apply if the foreign states are also socialistic. Moreover, a statesman who is convinced of the desirability of Socialism must expect that intercourse with foreigners will make them also socialists: he will not fear lest it undermine the socialism of his own compatriots.

The theory of Free Trade shows how the closing of the frontiers of a socialist community against the import of foreign commodities would injure its inhabitants. Capital and labour would have to be applied under relatively unfavourable conditions yielding a lower product than otherwise would have been obtained. An extreme example will make this clear. At the expense of an enormous outlay of capital and labour a socialist Germany could grow coffee in greenhouses. But it would obviously be more advantageous to procure it from Brazil in exchange for products for whose production conditions in Germany were more favourable.*10

2 Foreign Trade Under Socialism

Such considerations indicate the principles on which a socialist community would have to base its commercial policy. In so far as it aspired to let its actions be guided purely by economic considerations it would have to aim at securing just what under complete freedom of trade would be secured by the unrestricted play of economic forces. The socialist community would limit its activities to the production of those commodities it could produce under comparatively more favourable conditions than existed abroad, and it would exploit each single line of production only so far as this relative advantage justified. It would procure all other commodities from abroad by way of exchange.

This fundamental principle holds good whether or not trade with abroad is carried out by recourse to a general medium of exchange—by recourse to money—or not. In foreign trade, just as in internal trade—there is no difference between them—no rational production could proceed without money reckoning and the formation of prices for the means of production. On this point, we have nothing to add to what we have said already. But here we wish to consider a socialist community, existing in a world not otherwise socialistic. This community could estimate and compute in money in exactly the same way as a state railway, or a city waterworks, existing in a society otherwise based upon private ownership of the means of production.

3 Foreign Investment

No one can regard what his neighbour does as a matter of mere indifference. Everyone is interested in raising the productivity of labour by the widest division of labour possible under given circumstances. I too am injured if some people maintain a state of economic self-sufficiency: for, if they were to relax their isolation, the division of labour could be made even more comprehensive. If the means of production are in the hands of relatively inefficient agents, the damage is universal.

Under Capitalism the profit-seeking of individual entrepreneurs harmonizes the interests of the individual with those of the community. On the one hand, the entrepreneur is always seeking for new markets, and under selling with cheaper and better wares the dearer and inferior products of less rationally organized production. On the other, he is always seeking cheaper and more productive sources of raw materials and opening up more favourable sites for production. This is the true nature of that expansive tendency of Capitalism, which neo-Marxian propaganda so completely misrepresents as the "Verwertungsstreben des Kapitals" ("the drive of capital for profit"), and so amazingly involves into an explanation of modern Imperialism.

The old colonial policy of Europe was mercantilistic, militaristic, and imperialistic. With the defeat of mercantilism by liberal ideas, the character of colonial policy completely changed. Of the old colonial powers, Spain, Portugal and France had lost the greater part of their former possessions. England, who had become the greatest of the colonial powers, managed her possessions according to the principles of free trade theory. It was not cant for English free traders to speak of England's vocation to evaluate backward people to a state of civilization. England has shown by acts that she has regarded her position in India, in the Crown Colonies, and in the Protectorates, as a general mandatory of European civilization. It is not hypocrisy when English liberals speak of England's rule in the colonies as being not less useful for the inhabitants and for the rest of the world than it is for England. The mere fact that England preserved Free Trade in India shows that she conceived her colonial policy in a spirit quite different from that of the states who entered, or re-entered the sphere of colonial policy in the last decades of the nineteenth century—France, Germany, the United States, Japan, Belgium and Italy. The wars waged by England during the era of Liberalism to extend her colonial empire and to open up territories which refused to admit foreign trade, laid the foundations of the modern world economy.*11 To measure the true significance of these wars one has only to imagine what would have happened if India and China and their hinterland had remained closed to world commerce. Not only each Chinese and each Hindu, but also each European and each American, would be considerably worse off. Were England to lose India today, and were that great land, so richly endowed by nature, to sink into anarchy, so that it no longer offered a market for international trade—or no longer offered so large a market—it would be an economic catastrophe of the first order.

Liberalism aims to open all doors closed to trade. But it no way desires to compel people to buy or to sell. Its antagonism is confined to those governments which, by imposing prohibition and other limitations on trade, exclude their subjects from the advantages of taking part in world commerce, and thereby impair the standard of life of all mankind. The Liberal policy has nothing in common with Imperialism. On the contrary, it is designed to overthrow Imperialism and expel it from the sphere of international trade.

A socialist community would have to do the same. It, too, would not be able to allow areas lavishly endowed by nature to be permanently shut off from international trade, nor whole nations to refrain from exchange. But here Socialism would encounter a problem which can only be solved under Capitalism—the problem of ownership of capital abroad.

Under Capitalism, as Free Traders would have it, frontiers would be without significance. Trade would flow over them unhindered. They would prohibit neither the movement of the most suitable producers towards immobile means of production, nor the investment of mobile means of production in the most suitable places. Ownership of the means of production would be independent of citizenship. Foreign investment would be as easy as investment at home.

Under Socialism the situation would be different. It would be impossible for a socialist community to possess means of production lying outside its own borders. It could not invest capital abroad even if it would yield a higher product there. A socialist Europe must remain helpless, while a socialist India exploits its resources inefficiently, and thereby brings fewer goods to the world market than it would otherwise have done. New supplies of capital must be utilized under less favourable conditions in Europe, while in India, for want of new capital, more favourable conditions of production are not fully exploited. Thus independent socialist communities existing side by side and exchanging commodities only, would achieve a nonsensical position. Quite apart from other considerations the very fact of their independence would lead to a state of affairs under which productivity would necessarily diminish.

These difficulties could not be overcome so long as independent socialist communities existed side by side. They could only be surmounted by the amalgamation of the separate communities into a unitary socialist state comprehending the whole world.

Section III. Particular Forms of Socialism and Pseudo-Socialism

CHAPTER 15

Particular Forms of Socialism

1 The Nature of Socialism

The essence of Socialism is this: All the means of production are in the exclusive control of the organized community. This and this alone is Socialism. All other definitions are misleading.

It is possible to believe that Socialism can only be brought about under quite definite political and cultural conditions. Such a belief however is no justification for confining the term to one particular form of Socialism and withholding it from all other conceivable ways of realizing the socialist ideal. Marxian socialists have been very zealous in commending their own particular brand of Socialism as the only true Socialism and in insisting that all other socialist ideals and methods of realizing Socialism have nothing to do with genuine Socialism. Politically this attitude of the socialists has been extremely astute. It would have greatly increased the difficulties of their campaign if they had been prepared to admit that their ideal had anything in common with the ideals advocated by the leaders of other parties. They would never have rallied millions of discontented Germans to their banners if they had openly admitted that their aims were not fundamentally different from those of the governing classes of the Prussian state. If a Marxian had been asked before October 1917 in what way his Socialism differed from the Socialism of other movements, especially from that of the Conservatives, he would have replied that under Marxian Socialism, Democracy and Socialism were indissolubly united, and moreover that Marxian Socialism was a stateless Socialism because it intended to abolish the State.

We have seen already how much these arguments are worth, and as a matter of fact, since the victory of the Bolsheviks, they have rapidly disappeared from the list of Marxian commonplaces. At any rate the conceptions of democracy and statelessness which the Marxians hold today are quite different from those which they held previously.

But the Marxians might have answered the question another way. They might have said that their Socialism was revolutionary, as opposed to the reactionary and conservative Socialism of others. Such an answer leads much sooner to a recognition of the difference between Marxian social democracy and other socialist movements. For to a Marxian, revolution does not merely signify a forcible alteration of the existing state of affairs, but, as befits his peculiar fatalism, a process which brings mankind nearer the fulfillment of its destiny.*12 For him the impending social revolution which will bring about Socialism is the last step to eternal salvation. Revolutionaries are those whom history has chosen to be the instruments for the realization of its plan. The revolutionary spirit is the sacred fire which has descended upon them and enables them to accomplish this great work. In this sense the Marxian socialist regards it as the most notable characteristic of his party that it is a revolutionary party. In this sense he regards all other parties as a single, uniform, reactionary mass because they are opposed to his methods of achieving ultimate bliss.

It is obvious that all this has nothing to do with the sociological concept of the socialist community. It is certainly a remarkable thing that a group of persons should claim to be the only people elected to bring us to salvation; but when these persons know of no other road to salvation than one which many others have believed in, the assertion that they exclusively are ordained for the task is not sufficient to differentiate their aim fundamentally from that of others.

2 State Socialism

To understand the concept of State Socialism it is not sufficient to explain the term etymologically. The history of the word reflects only the fact that State Socialism was the Socialism professed by the authorities of the Prussian and other German states. Because they identified themselves with the State and with the form taken by the State and with the idea of the State generally, it suggested calling the Socialism which they adopted State Socialism. The more Marxian teaching about the class character of the State and the decay of the State obscured the fundamental idea of the State, the easier it became to use the term.

Marxian Socialism was vitally concerned in making a distinction between nationalization and socialization of the means of production. The slogans of the Social Democratic party would never have become popular if they had represented nationalization of the means of production as the ultimate aim of socialist change. For the state known to the people among whom Marxism found its widest acceptance was not such as to inspire much hope from its incursions into economic activity. The German, Austrian and Russian disciples of Marxism lived in open feud with the powers which to them represented the State. In addition they had the opportunity of gauging the results of nationalization and municipalization; and, with the best will in the world, they could not overlook the great shortcomings of state and municipal enterprise. It was quite impossible to arouse enthusiasm for a programme aiming at nationalization. A party of opposition was bound above all things to attack the hated authoritarian state; only in this way could it win over the discontented. From this need of political agitation arose the Marxian doctrine of the withering away of the state. The liberals had demanded the limitation of the authority of the state and the transfer of government to the representatives of the people; they had demanded the free state. Marx and Engels tried to outbid them by unscrupulously adopting the anarchistic doctrine of the abolition of all state authority regardless of the fact that Socialism would not mean the abolition, but rather the unrestricted expansion of the power of the state.

Equally untenable and absurd as the doctrine of the withering away of the state under Socialism is the academic distinction between nationalization and socialization which is closely bound up with it. The Marxians themselves are so conscious of the weakness of their line of argument that they usually avoid discussing this point and confine themselves to talking of the socialization of the means of production, without any further elaboration of the idea, so as to create the impression that socialization is something different from the nationalization with which everybody is acquainted. When they cannot avoid discussing this ticklish point they are obliged to admit that the nationalization of undertakings is a "preliminary stage in the acquisition of all productive powers by society itself"*13 or "the natural jumping-off point in the process leading to the socialist community."*14

Thus Engels finally contents himself with entering a caveat against accepting without further ado "every" form of nationalization as socialistic. He would not in the first place describe as "steps towards Socialism," nationalization carried out for purposes of state finance, such as might be adopted "chiefly to provide new sources of revenue independent of Parliamentary sanction." Nevertheless for these reasons nationalization would also mean, in the Marxian language, that in one branch of production, the appropriation of surplus value by the capitalist was abolished. The same is true of nationalization carried out for political or military reasons which Engels also refused to accept as socialistic. He regards it as the criterion of socialistic nationalization that the means of production and trade taken over "should have actually out-grown the direction by joint stock companies, so that nationalization has become economically inevitable." This necessity arises first in the case of "the large scale communications: posts, telegraphs and railways."*15 But it is precisely the largest railways in the world—the North American—and the most important telegraph lines—the deep sea cables—that have not been nationalized, whilst small unimportant lines in the etatistic countries have long been nationalized. The nationalization of the postal service moreover was primarily for political reasons and that of the railways for military ones. Can it be said that these nationalizations were "economically inevitable?" And what on earth does "economically inevitable" mean?

Kautsky, too, contents himself with rejecting the view "that every nationalization of an economic function or of an economic enterprise is a step towards Socialism and that this can be brought about by a general nationalization of the whole economic machine without the need for a fundamental change in the nature of the State."*16 But no one has ever disputed that the fundamental nature of the State would be greatly changed if it were transformed into a socialist community through the nationalization of the whole economic apparatus. Thus Kautsky is unable to say anything more than that "as long as the possessing classes are the governing classes" complete nationalization is impossible. It will be achieved when "the workers become the governing classes in the state." Only when the proletariat has seized political power will it "transform the state into a great fundamentally self-sufficient economic society."*17 The main question—the question which alone needs an answer—whether complete nationalization carried out by another party than the socialist one would also constitute Socialism, Kautsky carefully avoids.

There is, of course, a fundamental distinction of the highest importance between the nationalization or municipalization of individual undertakings which are publicly or communally run in a society otherwise maintaining the principle of private property in the means of production, and the complete socialization which tolerates no private ownership by individuals in the means of production alongside that of the socialist community. As long as only a few undertakings are run by the State, prices for the means of production will be established in the market, and it is thus still possible for State undertakings to make calculations. How far the conduct of the undertakings would be based on the results of these calculations is another question; but the very fact that to a certain extent the results of operations can be quantitatively ascertained provides the business administration of such undertakings with a gauge which would not be available to the administration of a purely socialist community. The way in which State undertakings are run may justifiably be called bad business but it is still business. In a socialist community, as we have seen, economy in the strict sense of the word, cannot exist.*18

Nationalization of all the means of production involves complete Socialism. Nationalization of some of the means of production is a step towards complete Socialism. Whether we are to remain satisfied with the first step or whether we desire to proceed further does not alter its fundamental character. In the same way, if we wish to transfer all undertakings to the ownership of the organized community we cannot do otherwise than nationalize every single undertaking, simultaneously or successively.

The obscurity thrown by Marxism on the idea of socialization was strikingly illustrated in Germany and Austria when the Social Democrats came into power in November 1918. A new and hitherto almost unheard slogan became popular overnight: Socialization (Sozialisierung) was the solution. This was merely the paraphrasing of the German word Vergesellschaftung into a fine-sounding foreign word. The idea that Sozialisierung was nothing more than nationalization or municipalization could not occur to anybody; anyone who maintained this was simply believed to know nothing about it, since it was thought that between the two things yawned an abysmal gap. The Socialization Commissions set up soon after the Social Democrats acquired power were set the problem of defining Sozialisierung in such a way that, ostensibly at least, it could be distinguished from the nationalization and municipalization of the previous regime.

The first report issued by the German commission dealt with the socialization of the coal industry, and in rejecting the idea of achieving this by the nationalization of the coal mines and the coal trade it emphasized in a striking manner the shortcomings of a national coal industry. But nothing was said as to how socialization differed actually from nationalization. The report professed the opinion that "an isolated nationalization of the coal industry cannot be considered as socialization while capitalist enterprise continues in other branches of production: it would only mean the replacement of one employer by another." But it left open the question whether an isolated "socialization" such as it intended and proposed could mean anything else under the same conditions.*19 It would have been understandable if the commission had gone on to say that in order to fulfil the happy results of a socialist order of society it was not sufficient to nationalize one branch of production, and had recommended that the State should take over all undertakings at one blow, as the Bolsheviks in Russia and Hungary had done and as the Spartacists in Germany wanted to do. But it did not do this. On the contrary, it elaborated proposals for socialization which advocated the isolated nationalization of various branches of production, beginning with coal production and distribution. That the commission avoided using the term nationalization makes no difference. It was mere juristic hair-splitting when the commission proposed that the owners of the socialized German coal industry should not be the German State but a "German public coal trust" and when it went on to assert that this ownership should be conceived "only in a formal juristic sense," but that "the material position of the private employer and thereby the possibility of exploiting workers and consumers" is denied to this public trust,*20 the commission was using the emptiest of gutter catchwords. Indeed the whole report is nothing but a collection of all the popular fallacies about the evils of the capitalist system. The only way in which the coal industry, socialized in accordance with the proposals of the majority, would differ from other public undertakings is the composition of its directorate. At the head of the coal mines there should be no single official but a committee constituted in a certain way. Parturiunt montes, nascetur ridiculus mus! (The mountain labors and a ridiculous mouse is born!)

State Socialism, therefore, is not distinguished by the fact that the State is the pivot of the communal organization, since Socialism is quite inconceivable otherwise. If we wish to understand its nature we must not look to the term itself. This would take us no further than would an attempt to grasp the concept of metaphysics from an examination of the meaning of the parts that make up the word. We must ask ourselves what ideas have been associated with the expression by those who are generally regarded as the followers of the state socialistic movements, that is, the out-and-out etatists.

Etatistic Socialism is distinguished from other socialist systems in two ways. In contradistinction to many other socialist movements which contemplate the greatest possible measure of equality in the distribution of the social income between individuals, Etatistic Socialism makes the basis of distribution the merit and rank of the individual. It is obviously superfluous to point out that judgment of merit is purely subjective and cannot in any way be tested from a scientific view of human relations. Etatism has quite definite views about the ethical value of individual classes in the community. It is imbued with a high esteem for the monarchy, the nobility, big landowners, the clergy, professional soldiers, especially the officer class, and officials. With certain reservations it also allots a privileged position to savants and to artists. Peasants and small tradesmen are in a special class and below them come the manual labourers. At the bottom are the unreliable elements which are discontented with the sphere of action and the income allotted to them by the etatist plan and strive to improve their material position. The etatist mentally arranges a hierarchy of the members composing his future state. The more noble will have more power, more honours and more income than the less noble. What is noble and what is ignoble will be decided above all by tradition. To the etatist the worst feature of the capitalist system is that it does not assign income according to his valuation of merit. That a milk dealer or a manufacturer of trouser buttons should draw a larger income than the sprig of a noble family, than a privy councillor or a lieutenant, strikes him as intolerable. In order to remedy this state of affairs the capitalist system must be replaced by the etatistic.

This attempt on the part of the etatists to maintain the traditional social order of rank and the ethical valuation of different classes, in no way contemplates transferring all property in the means of production to the formal ownership of the State. This indeed, in the etatistic view, would be a complete subversion of all historical rights. Only the large undertakings would be nationalized, and even then an exception would be made in favour of large scale agriculture, especially inherited family property. In agriculture and in small and medium-sized industries private property is to continue in name at least. In the same way the free professions will be allowed scope, with certain limitations. But all enterprises must become essentially state undertakings. The agriculturist will retain the name and title of owner, but he will be forbidden "egotistically to look merely to mercantile profit"; he has the "duty to execute the aims of the State."*21 For agriculture, according to the etatist, is a public office. "The agriculturist is a state official and must cultivate for the needs of the State according to his best knowledge and conscience, or according to state orders. If he gets his interest and sufficient to maintain himself he has everything he is entitled to demand."*22 The same applies to the artisan and the trader. For the independent entrepreneur with free control over the means of production there is as little room in State Socialism as in any other Socialism. The authorities control prices and decide what and how much shall be produced and in what way. There will be no speculation for "excessive" profit. Officials will see to it that no one draws more than the appropriate "fair income," that is to say an income ensuring him a standard of life appropriate to his rank. Any excess will be "taxed away."

Marxian writers are also of the opinion that to bring Socialism about, small undertakings need not necessarily be transferred directly to public ownership. Indeed they have regarded this as quite impossible; the only way in which socialization can be carried out for these small undertakings is to leave them in the formal possession of their owners and simply subject them to the all-embracing supervision of the State. Kautsky himself says that "no socialist worthy of serious consideration has ever demanded that peasants should be expropriated, let alone their property confiscated."*23 Neither does Kautsky propose to socialize small producers by expropriating their property.*24 The peasant and the craftsman will be fitted into the machinery of the socialist community in such a way that their production and the valuation of their products will be regulated by the economic administration whilst nominally the property will remain theirs. The abolition of the free market will transform them from independent owners and entrepreneurs into functionaries of the socialist community, distinguished from other citizens only by the form of the remuneration.*25 It cannot therefore be regarded as a peculiarity of the etatistic socialist scheme that in this way remnants of private property in the means of production formally persist. The only characteristic peculiarity is the extent to which this method of arranging the social conditions of production is applied. It has already been said that etatism in general proposes in the same way to leave the large landowners—with the exception perhaps of the latifundia owners—in formal possession of their property. What is still more important is that it proceeds upon the assumption that the greater part of the population will find work in agriculture and small concerns, and that comparatively few will enter the direct service of the State as employees in large undertakings. Not only is etatism opposed to orthodox Marxists, as represented by Kautsky, through its theory that small scale agriculture is not less productive than large scale agriculture, but it is also of the opinion that in industry too, small scale undertakings have a great scope for operation at the side of the large concerns. This is the second peculiarity which distinguishes State Socialism from other socialist systems, especially social-democracy.

It is perhaps unnecessary further to elaborate the picture of the ideal State drawn by the state socialists. Over a large part of Europe it has been for decades the tacit ideal of millions, and everyone knows it even if no one has clearly defined it. It is the Socialism of the peaceful loyal civil servant, of the land-owner, the peasant, the small producer and of countless workers and employees. It is the Socialism of the professors, the famous "socialists of the chair"—the Kathedersozialismus—it is the Socialism of artists, poets, writers in an epoch of the history of art plainly bearing all the signs of decay. It is the Socialism supported by the churches of all denominations. It is the Socialism of Caesarism and of Imperialism, the ideal of the so-called "social monarchy." It is this that the policy of most European states, especially the German states, envisaged as the distant goal of man's endeavours. It is the social ideal of the age which prepared the Great War*26 and perished with it.

A Socialism which allots the shares of individuals in the social dividend according to merit and rank can be conceived only in the form of State Socialism. The hierarchy on which it bases its distribution is the only one popular enough not to arouse overwhelming opposition. Although it is less able to withstand rationalist criticism than many others that might be suggested, nevertheless it has the sanction of age. In so far as State Socialism attempts to perpetuate this hierarchy and to prevent any change in the scale of social relationships, the description "conservative socialism," sometimes applied to it, is justified.*27 In fact it is imbued more than any other form of Socialism with ideas that credit the possibility of complete crystallization and changelessness of economic conditions: its followers regard every economic innovation as superfluous and even harmful. And corresponding to this attitude is the method by which Etatism wishes to attain its ends. If Marxian Socialism is the social ideal of those who expect nothing except through a radical subversion of the existing order by bloody revolutions, State Socialism is the ideal of those who call in the police at the slightest sign of trouble. Marxism relies upon the infallible judgment of a proletariat filled with the revolutionary spirit, Etatism upon the infallibility of the reigning authority. They both agree in belief in a political absolutism which does not admit the possibility of error.

In contrast to State Socialism, Municipal Socialism presents no special form of the socialist ideal. The municipalization of undertakings is not regarded as a general principle on which to base a new arrangement of economic life. It would affect only undertakings with a market limited in space. In a rigorous system of State Socialism the municipal undertakings would be subordinated to the chief economic administration and would be no freer to develop than the agricultural and industrial undertakings nominally remaining in private hands.

3 Military Socialism

Military Socialism is the Socialism of a state in which all institutions are designed for the prosecution of war. It is a State Socialism in which the scale of values for determining social status and the income of citizens is based exclusively or preferably on the position held in the fighting forces. The higher the military rank the greater the social value and the claim on the national dividend.

The military state, that is the state of the fighting man in which everything is subordinated to war purposes, cannot admit private ownership in the means of production. Standing preparedness for war is impossible if aims other than war influence the life of individuals. All warrior castes whose members have been supported by the assignment of manorial rights or of grants of land, or even by industries based on a supply of unfree labour, have in time lost their warlike nature. The feudal lord became absorbed in economic activity and acquired other interests than waging war and reaping military honours. All over the world the feudal system demilitarized the warrior. The knights were succeeded by the Junkers. Ownership turns the fighting man into the economic man. Only the exclusion of private property can maintain the military character of the State. Only the warrior, who has no other occupation apart from war than preparation for war, is always ready for war. Men occupied in affairs may wage wars of defence but not long wars of conquest.

The military state is a state of bandits. It prefers to live on booty and tribute. Compared with this source of income the product of economic activity plays only a subordinate role; often it is completely lacking. And if booty and tribute accrue from abroad it is clear that they cannot go direct to individuals but only to the common treasury, which can distribute them only according to military rank. The army which alone assures the continuance of this source of income would not tolerate any other method of distribution. And this suggests that the same principle of distribution should be applied to the products of home production, which similarly accrue to citizens as the tribute and yield of serfdom.

In this way the communism of the Hellenic pirates of Lipara and all other robber states can be explained.*28 It is the "communism of robbers and freebooters,"*29 arising from the application of military ideas to all social relationships. Caesar relates of the Suebi, whom he calls gens longe bellicosissima Germanorum omnium (a people long the most warlike of the German tribes), that they sent warriors over the borders every year for plunder. Those who remained behind carried on economic activity for those in the field; in the following year. the roles were exchanged. There was no land in the exclusive ownership of individuals.*30 Only by each sharing in the product of the military and economic activity carried on with a common purpose and subject to a common danger, can the warrior state make every citizen a soldier and every soldier a citizen. Once it allows some to remain soldiers and others to remain citizens working with their own property the two callings will soon stand out in contrast. Either the warriors must subjugate the citizens and in that case it would be doubtful if they could set out on plundering expeditions leaving an oppressed population at home—or the citizens will succeed in gaining the upper hand. In the latter event the warriors will be reduced to mercenaries and forbidden to set out in search of plunder because, as a standing danger, they cannot be allowed to grow too powerful. In either case the state must lose its purely military character. Therefore any weakening of "communistic" institutions involves a weakening of the military nature of the state, and the warrior society is slowly transformed into an industrial one.*31

The forces driving a military state to Socialism could be clearly observed in the Great War. The longer the war lasted and the more the states of Europe were transformed into armed camps, the more politically untenable seemed the distinction between the fighting man, who had to endure the hardships and danger of the war, and the man who remained at home to profit from the war boom. The burden was distributed too unequally. If the distinction had been allowed to persist and the war had continued longer the countries would infallibly have been split into two factions and the armies would have finally turned their weapons against their own kinsmen. The Socialism of conscript armies demands for its complement the Socialism of conscript labour at home.

The fact that they cannot preserve their military character without a communistic organization does not strengthen the warrior states in the war. Communism is for them an evil which they must accept; it produces a weakness by which they eventually perish. Germany in the first years of the war trod the path to Socialism because the military etatistic spirit, which was responsible for the policy leading to the war, drove it towards State Socialism. Towards the end of the war socialization was more and more energetically carried out because, for the reasons just stated, it was necessary to make conditions at home similar to those at the front. State Socialism did not alleviate the situation in Germany, however, but worsened it; it did not stimulate production but restricted it; it did not improve the provisioning of the army and those at home but made it worse.*32 And needless to say it was the fault of the etatistic spirit that in the tremendous convulsions of the war and the subsequent revolution not one strong individual arose from the German people.

The lesser productivity of communistic methods of economic activity is a disadvantage to the communistic warrior state when it comes into clash with the richer and therefore better armed and provisioned members of nations which acknowledge the principle of private property. The destruction of initiative in the individual, unavoidable under Socialism, deprives it in the decisive hour of battle of leaders who can show the way to victory, and subordinates who can carry out their instructions. The great military communist state of the Incas*33 was easily overthrown by a handful of Spaniards.

If the enemy against which the warrior state has to fight is to be found at home then we can speak of a communism of overlords. "Casino communism" was the name given by Max Weber to the social arrangements of the Dorians in Sparta because of their habits of eating together.*34 If the ruling caste, instead of adopting communistic institutions assigns land together with its inhabitants to the ownership of individuals sooner or later it will be ethnically absorbed by the conquered. It becomes transformed into a land-owning nobility, which eventually draws even the conquered into military service. In this way the state loses the character based upon the waging of war. This development took place in the kingdoms of the Langobards, the West Goths and the Franks and in all the regions where the Normans appeared as conquerors.

4 Christian Socialism

A theocratic organization of the state demands either a self-sufficing family economy or the socialist organization of industry. It is incompatible with an economic order which allows the individual free play to develop his powers. Simple faith and economic rationalism cannot dwell together. It is unthinkable that priests should govern entrepreneurs.

Christian Socialism, as it has taken root in the last few decades among countless followers of all Christian churches, is merely a variety of State Socialism. State Socialism and Christian Socialism are so entangled that it is difficult to draw any clear line between them, or to say of individual socialists whether they belong to the one or the other. Even more than etatism, Christian Socialism is governed by the idea that the economic system would be perfectly stationary if the desire for profit and personal gain by men directing their efforts solely to the satisfaction of material interests did not disturb its smooth course. The advantage of progressive improvements in methods of production is admitted, if only with limitations; but the Christian socialist does not clearly understand that it is just these innovations which disturb the peaceful course of the economic system. In so far as this is recognized, the existing state of affairs is preferred to any further progress. Agriculture and handicraft, with perhaps small shopkeeping, are the only admissible occupations. Trade and speculation are superfluous, injurious, and evil. Factories and large scale industries are a wicked invention of the "Jewish spirit"; they produce only bad goods which are foisted on buyers by the large stores and by other monstrosities of modern trade to the detriment of purchasers. It is the duty of legislation to suppress these excesses of the business spirit and to restore to handicraft the place in production from which it has been displaced by the machinations of big capital.*35 Large transport undertakings that cannot be abolished should be nationalized.

The basic idea of Christian Socialism that runs through all the teachings of its representatives is purely stationary in outlook. In the economic system which they have in mind there is no entrepreneur, no speculation, and no "inordinate" profit. The prices and wages demanded and given are "just." Everyone is satisfied with his lot because dissatisfaction would signify rebellion against divine and human laws. For those incapable of work Christian charity will provide. This ideal it is asserted was achieved in medieval times. Only unbelief could have driven mankind out of this paradise. If it is to be regained mankind must first find the way back to the Church. Enlightenment and liberal thought have created all the evil which afflicts the world today.

The protagonists of Christian social reform as a rule do not regard their ideal Society of Christian Socialism as in any way socialistic. But this is simply self-deception. Christian Socialism appears to be conservative because it desires to maintain the existing order of property, or more properly it appears reactionary because it wishes to restore and then maintain an order of property that prevailed in the past. It is also true that it combats with great energy the plans of socialists of other persuasions for a radical abolition of private property, and in contradistinction to them asserts that not Socialism but social reform is its aim. But Conservatism can only be achieved by Socialism. Where private property in the means of production exists not only in name but in fact, income cannot be distributed according to an historically determined or an any other way permanently established order. Where private property exists, only market prices can determine the formation of income. To the degree in which this is realized, the Christian social reformer is step by step driven to Socialism, which for him can be only State Socialism. He must see that otherwise there cannot be that complete adherence to the traditional state of affairs which his ideal demands. He sees that fixed prices and wages cannot be maintained, unless deviations from them are menaced by threats of punishment from a supreme authority. He must also realize that wages and prices cannot be arbitrarily determined according to the ideas of a world improver, because every deviation from market prices destroys the equilibrium of economic life. He must therefore progressively move from a demand for price regulation to a demand for a supreme control over production and distribution. It is the same path that practical etatism has followed. At the end in both cases, is a rigid Socialism which leaves private property only in name, and in fact transfers all control over the means of production to the State.

Only a part of the Christian socialist movement has openly subscribed to this radical programme. The others have shunned an open declaration. They have anxiously avoided drawing the logical conclusions of their premises. They give one to understand that they are combating only the excrescences and abuses of the capitalist order; they protest that they have not the slightest desire to abolish private property; and they constantly emphasize their opposition to Marxian Socialism. But they characteristically perceive that this opposition mainly consists in differences of opinion as to the way in which the best state of society can be attained. They are not revolutionary and expect everything from an increasing realization that reform is necessary. For the rest they constantly proclaim that they do no wish to attack private property. But what they would retain is only the name of private property. If the control of private property is transferred to the State the property owner is only an official, a deputy of the economic administration.

It can be seen at once how the Christian Socialism of today corresponds to the economic ideal of the medieval Scholastics. The starting point, the demand for "just" wages and prices, that is, for a definite historically attained distribution of income, is common to both. Only the realization that this is impossible, if the economic system retains private property in the means of production, forces the modern Christian reform movement towards Socialism. In order to achieve their demands, they must advocate measures which, even if formally retaining private property, lead to the complete socialization of society.

It will be shown later that this modern Christian Socialism has nothing to do with the suppositious but often cited Communism of the Early Christians. The socialist idea is new to the Church. This is not altered by the fact that the most recent development of Christian social theory has led the Church*36 to recognize the fundamental rightfulness of private property in the means of production, whereas the early church teaching, in view of the command of the gospels condemning all economic activity, had avoided unconditionally accepting even the name of private property. For we must understand what the Church has done in recognizing the rightfulness of private property, only as opposition to the efforts of the socialists to overthrow the existing order forcibly. In reality the Church desires nothing but State Socialism of a particular colour.

The nature of socialistic methods of production is independent of the concrete methods involved in the attempt to realize it. Every attempt at Socialism, however brought about, must founder on the impracticability of setting up a purely socialistic economy. For that reason, and not because of deficiencies in the moral character of mankind, Socialism must fail.

It may be granted, that the moral qualities required of the members of a socialist community could best be fostered by the Church. The spirit which must prevail in a socialist community is most akin to that of a religious community. But to overcome the difficulties in the way of establishing a socialist community would require a change in human nature or in the laws of the nature by which we are surrounded, and even faith cannot bring this to pass.

5 The Planned Economy

The so-called planned economy (Planwirtschaft) is a more recent variety of Socialism.

Every attempt to realize Socialism comes up quickly against insurmountable difficulties. This is what happened to Prussian State Socialism. The failure of nationalization was so striking that it could not be overlooked. Conditions in government undertakings were not such as to encourage further steps along the road to state and municipal control. The blame for this was thrown upon the officials. It had been a mistake to exclude the "business man." In some way or other the abilities of the entrepreneur must be brought to the service of Socialism. From this notion came the arrangement of "mixed" enterprises. Instead of complete nationalization or municipalization we have the private undertaking in which the state or municipality is interested. In this way, on the one side, regard is paid to the demand of those who think it is not right that the state and municipalities should not share in the yield of undertakings carried on under their august sway. (Of course the State might get and gets its share more effectively by taxation without exposing the public finances to the possibility of loss. On the other hand it is thought by this system to bring all the active powers of the entrepreneur into the service of the common enterprise—a gross error. For as soon as representatives of the government take part in administration all the hindrances which cripple the initiative of public officials come into play. The "mixed" form of undertaking makes it possible to exempt employees and workers from the regulations applying to public officials and thereby to mitigate slightly the harmful effects which the official spirit exerts upon the profitability of undertakings. The mixed undertakings have certainly turned out better on the whole than the purely governmental undertakings. But this no more shows that Socialism is practicable than do the good results occasionally shown by individual public undertakings. That it is possible under certain favourable circumstances to carry on a public enterprise with some success in the midst of an economic society otherwise based on private property in the means of production does not prove that a complete socialization of society is practicable.

During the Great War the authorities in Germany and Austria tried, under war Socialism, to leave to the entrepreneurs the direction of nationalized undertakings. The haste with which socialist measures were adopted under very difficult war conditions and the fact that at the outset no one had any clear idea of the fundamental implications of the new policy, nor of the lengths to which it was to be carried, left no other means open. The direction of individual branches of production was made over to compulsory associations of employers, who were put under government supervision. Price regulation on the one hand and drastic taxation of profits on the other hand were to ensure that the employer was no more than an employee sharing the yield.*37 The system worked very badly. Nevertheless it was necessary to adhere to it, unless all attempts at Socialism were to be abandoned, because no one knew anything better to put in its place. The memorandum of the German Economic Ministry (May 7th, 1919), drawn up by Wissell and Moellendorff, states in plain words, that there was nothing else for a socialist government to do but to maintain the system known during the war as "war economy." "A socialist government" it says "cannot ignore the fact that, because of a few abuses, public opinion is being poisoned by interested criticisms against a systematic planned economy; it may improve the planned system; it may reorganize the old bureaucracy; it may even in the form of self-government make over the responsibility to the people concerned in the business; but it must proclaim itself an adherent of the compulsory planned economy: that is to say an adherent of the most unpopular concepts of duty and coercion."*38

Planned economy is a scheme of a socialist community that attempts to solve in a particular way the insoluble problem of the responsibility of the acting organ. Not only is the idea on which this attempt is based deficient, but the solution itself is only a sham, and that the creators and supporters of this scheme should overlook this, is particularly characteristic of the mental attitude of officialdom. The self-government granted to individual areas and to individual branches of production is important only in minor matters, for the centre of gravity of economic activity lies in the adjustment between individual areas and individual branches of production. This adjustment can only proceed uniformly; if this is not provided for, the whole plan would have to be regarded as syndicalist. In fact Wissell and Möllendorff envisage a State Economic Council which has "supreme control of the German economic system in co-operation with the highest competent organs of the State."*39 In essence, therefore, the whole proposal comes to nothing more than that responsibility for the economic administration is to be shared between the ministers and a second authority.

The Socialism of the planned economy is distinguished from the State Socialism of the Prussian State under the Hohenzollerns chiefly by the fact that the privileged position in business control and in the distribution of income, which the latter allotted to the Junkers and the bureaucrats, is here assigned to the ci-devant entrepreneur. This is an innovation dictated by the change in the political situation resulting from the catastrophe which has overwhelmed the Crown, the nobility, the bureaucracy and the officer class; apart from this it is without significance for the problem of Socialism.

In the last few years, a new word has been found for that which was covered by the expression "planned economy": State Capitalism, and no doubt in the future many more proposals for the salvaging of Socialism will be brought forward. We shall learn many new names for the same old thing. But the thing, not its names, is what matters, and all schemes of this sort will not alter the nature of Socialism.

6 Guild Socialism

In the first years after the World War, people in England and on the Continent looked on Guild Socialism as the panacea. It has long since been forgotten. Nevertheless, we must not pass it over in silence, when discussing socialist projects; for it represents the one contribution to modern socialist plans made by the Anglo-Saxons, in economic matters the most advanced of peoples. Guild Socialism is another attempt to surmount the insoluble problem of a socialist direction of industry. It did not need the failure of state socialistic activities to open the eyes of the English people, preserved by the long reign of liberal ideas from that over-valuation of the State which has been prevalent in modern Germany. Socialism in England has never been able to overcome the mistrust of the government's capacity to regulate all human affairs for the best. The English have always recognized the great problem which other Europeans before 1914 had scarcely grasped.

In Guild Socialism three different things must be distinguished. It establishes the necessity for replacing the capitalist system by a socialist one; this thoroughly eclectic theory need not worry us further. It also provides a way by which Socialism may be realized; this is only important for us inasmuch as it could very easily lead to Syndicalism instead of Socialism. Finally it draws up the programme of a future socialist order of society. It is with this that we are concerned.

The aim of Guild Socialism is the socialization of the means of production. We are therefore justified in calling it socialism. Its unique feature is the particular structure which it gives to the administrative organization of the future socialist state. Production is to be controlled by the workers in individual branches of productions. They elect foremen, managers and other business leaders, and they regulate directly and indirectly the conditions of labour and order the methods and aims of production.*40 The Guilds as organizations of the producers in the individual branches of industry, face the State as the organization of the consumers. The State has the right to tax the Guilds, and is thus able to regulate their price—and wages-policy.*41

Guild Socialism greatly deceives itself if it believes that in this way it could create a socialist order of society which would not endanger the freedom of the individual and would avoid all those evils of centralized Socialism which the English detest as Prussianism.*42 Even in a guild socialist society the whole control of production belongs to the State. The State alone sets the aim of production and determines what must be done in order to achieve this aim. Directly or indirectly through its taxation policy, it determines the conditions of labour, moves capital and labour from one branch of industry to another, makes adjustments and acts as intermediary between the guilds themselves and between producers and consumers. These tasks falling to the State are the only important ones and they constitute the essence of economic control.*43 What is left to the individual guilds, and, inside them, to the local unions and individual concerns is the execution of work assigned to them by the State. The whole system is an attempt to translate the political constitution of the English State into the sphere of production; its model is the relation in which local government stands to central government. Guild Socialism expressly describes itself as economic Federalism. But in the political constitution of a liberal state it is not difficult to concede a certain independence to local government. The necessary co-ordination of the parts within the whole is sufficiently ensured by the compulsion enforced on every territorial unit to manage its affairs in accordance with the laws. But in the case of production this is far from sufficient. Society cannot leave it to the workers themselves in individual branches of production to determine the amount and the quality of the labour they perform and how the material means of production thereby involved shall be applied.*44 If the workers of a guild work less zealously or use the means of production wastefully, this is a matter which concerns not only them but the whole society. The State entrusted with the direction of production cannot therefore refrain from occupying itself with the internal affairs of the guild. If it is not allowed to exercise direct control by appointing managers and works directors, then in some other way—perhaps by the means which lie at hand in the right of taxation, or the influence it has over the distribution of consumption goods—it must endeavour to reduce the independence of the guilds to a meaningless facade. It is the foremen who are in daily and hourly contact with the individual worker to direct and supervise his work who are hated most by the worker. Social reformers, who take over naively the sentiments of the workers, may believe it possible to replace these organs of control by trustworthy men chosen by the workers themselves. This is not quite as absurd as the belief of the anarchists that everyone would be prepared without compulsion to observe the rules indispensable for communal life; but it is not much better. Social production is a unity in which every part must perform exactly its function in the framework of the whole. It cannot be left to the discretion of the part to determine how it will accommodate itself to the general scheme. If the freely chosen foreman does not display the same zeal and energy in his supervisory work as one not chosen by the workers, the productivity of labour will fall.

Guild Socialism therefore does not abolish any of the difficulties in the way of establishing a socialist order of society. It makes Socialism more acceptable to the English spirit by replacing the word nationalization, which sounds disagreeable in English ears, by the catchword "Self-Government in Industry." But in essence it does not offer anything different from what continental socialists recommend today, namely, the proposal to leave the direction of production to committees of the workers and employees engaged in production, and of consumers. We have already seen that this brings us no nearer to solving the problem of Socialism.

Guild Socialism owes much of its popularity to the syndicalistic elements which many of its adherents believe are to be found in it. Guild Socialism as its literary representatives conceive it, is doubtless not syndicalistic. But the way in which it proposes to attain its end might very easily lead to Syndicalism. If, to begin with, national guilds were estab