Fabian Essays in Socialism

Edited by: Shaw, George Bernard
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H. G. Wilshire, American editor.
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New York: The Humboldt Publishing Co.
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Collected essays, various authors. Includes "Industry under Socialism," by Annie Besant.
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The Transition to Social Democracy

by G. Bernard Shaw


WHEN the British Association honored me by an invitation to take part in its proceedings, I proposed to do so by reading a paper entitled "Finishing the Transition to Social Democracy." The word "finishing" has been, on consideration, dropped. In modern use it has gathered a certain sudden and sinister sense which I desire carefully to dissociate from the process to be described. I suggested it in the first instance only to convey in the shortest way that we are in the middle of the transition instead of shrinking from the beginning of it; and that I propose to deal with the part of it that lies before us rather than that which we have already accomplished. Therefore, though I shall begin at the beginning, I shall make no apology for traversing centuries by leaps and bounds at the risk of sacrificing the dignity of history to the necessity for coming to the point as soon as possible.


Briefly, then, let us commence by glancing at the Middle Ages. There you find, theoretically, a much more orderly England than the England of to-day. Agriculture is organized on an intelligible and consistent system in the feudal manor or commune: handicraft is ordered by the guilds of the towns. Every man has his class, and every class its duties. Payments and privileges are fixed by law and custom, sanctioned by the moral sense of the community, and revised by the light of that moral sense whenever the operation of supply and demand disturbs their adjustment. Liberty and Equality are unheard of; but so is Free Competition. The law does not suffer a laborer's wife to wear a silver girdle: neither does it force her to work sixteen hours a day for the value of a modern shilling. Nobody entertains the idea that the individual has any right to trade as he pleases without reference to the rest. When the townsfolk, for instance, form a market, they quite understand that they have not taken that trouble in order to enable speculators to make money. If they catch a man buying goods solely in order to sell them a few hours later at a higher price, they treat that man as a rascal; and he never, as far as I have been able to ascertain, ventures to plead that it is socially beneficent, and indeed a pious duty, to buy in the cheapest market and sell in the dearest. If he did, they would probably burn him alive, not altogether inexcusably. As to Protection, it comes naturally to them.


This Social Order, relics of which are still to be found in all directions, did not collapse because it was unjust or absurd. It was burst by the growth of the social organism. Its machinery was too primitive, and its administration too naïve, too personal, too meddlesome to cope with anything more complex than a group of industrially independent communes, centralized very loosely, if at all, for purely political purposes. Industrial relations with other countries were beyond its comprehension. Its grasp of the obligations of interparochial morality was none of the surest: of international morality it had no notion. A Frenchman or a Scotchman was a natural enemy: a Muscovite was a foreign devil: the relationship of a negro to the human race was far more distant than that of a gorilla is now admitted to be. Thus, when the discovery of the New World began that economic revolution which changed every manufacturing town into a mere booth in the world's fair, and quite altered the immediate objects and views of producers, English adventurers took to the sea in a frame of mind peculiarly favorable to commercial success. They were unaffectedly pious, and had the force of character which is only possible to men who are founded on convictions. At the same time, they regarded piracy as a brave and patriotic pursuit, and the slave trade as a perfectly honest branch of commerce, adventurous enough to be consistent with the honor of a gentleman, and lucrative enough to make it well worth the risk. When they stole the cargo of a foreign ship, or made a heavy profit on a batch of slaves, they regarded their success as a direct proof of divine protection. The owners of accumulated wealth hastened to "venture" their capital with these men. Persons of all the richer degrees, from Queen Elizabeth downward, took shares in the voyages of the merchant adventurers. The returns justified their boldness; and the foundation of the industrial greatness and the industrial shame of the eighteenth and nineteenth centuries was laid: modern Capitalism thus arising in enterprises for which men are now, by civilized nations, hung or shot as human vermin. And it is curious to see still, in the commercial adventurers of our own time, the same incongruous combination of piety and rectitude with the most unscrupulous and revolting villainy. We all know the merchant princes whose enterprise, whose steady perseverance, whose high personal honor, blameless family relations, large charities, and liberal endowment of public institutions mark them out as very pillars of society; and who are nevertheless grinding their wealth out of the labor of women and children with such murderous rapacity that they have to hand over the poorest of their victims to sweaters whose sole special function is the evasion of the Factory Acts.*22 They have, in fact, no more sense of social solidarity with the wage-workers than Drake had with the Spaniards or negroes.


With the rise of foreign trade and Capitalism, industry so far outgrew the control, not merely of the individual, but of the village, the guild, the municipality, and even the central government, that it seemed as if all attempt at regulation must be abandoned. Every law made for the better ordering of business either did not work at all, or worked only as a monopoly enforced by exasperating official meddling, directly injuring the general interest, and reacting disastrously on the particular interest it was intended to protect. The laws, too, had ceased to be even honestly intended, owing to the seizure of political power by the capitalist classes, which had been prodigiously enriched by the operation of economic laws which were not then understood.*23 Matters reached a position in which legislation and regulation were so mischievous and corrupt, that anarchy became the ideal of all progressive thinkers and practical men. The intellectual revolt formally inaugurated by the Reformation was reinforced in the eighteenth century by the great industrial revolution which began with the utilization of steam and the invention of the spinning jenny.*24 Then came chaos. The feudal system became an absurdity when its basis of communism with inequality of condition had changed into private property with free contract and competition rents. The guild system had no machinery for dealing with division of labor, the factory system, or international trade: it recognized in competitive individualism only something to be repressed as diabolical. But competitive individualism simply took possession of the guilds, and turned them into refectories for aldermen, and notable additions to the grievances and laughing stocks of posterity.


The desperate effort of the human intellect to unravel this tangle of industrial anarch brought modern political economy into existence. It took shape in France, where the confusion was thrice confounded; and proved itself a more practical department of philosophy than the metaphysics of the schoolmen, the Utopian socialism of More, or the sociology of Hobbes. It could trace its ancestry to Aristotle; but just then the human intellect was rather tired of Aristotle, whose economics, besides, were those of slaveholding republics. Political economy soon declared for industrial anarchy; for private property; for individual recklessness of everything except individual accumulation of riches; and for the abolition of all the functions of the State except those of putting down violent conduct and invasions of private property. It might have echoed Jack Cade's exclamation, "But then are we in order, when we are most out of order."


Although this was what political economy decreed, it must not be inferred that the greater economists were any more advocates of mere license than Prince Kropotkin, or Mr. Herbert Spencer, or Mr. Benjamin Tucker of Boston, or any other modern Anarchist. They did not admit that the alternative to State regulation was anarchy: they held that Nature had provided an all-powerful automatic regulator in Competition; and that by its operation self-interest would evolve order out of chaos if only it were allowed its own way. They loved to believe that a right and just social order was not an artificial and painfully maintained legal edifice, but a spontaneous outcome of the free play of the forces of Nature. They were reactionaries against feudal domineering and medieval meddling and ecclesiastical intolerance; and they were able to show how all three had ended in disgraceful failure, corruption and self-stultification. Indignant at the spectacle of the peasant struggling against the denial of those rights of private property which his feudal lord had successfully usurped, they strenuously affirmed the right of private property for all. And while they were dazzled by the prodigious impulse given to production by the industrial revolution under competitive private enterprise, they were at the same time, for want of statistics, so optimistically ignorant of the condition of the masses, that we find David Hume, in 1766, writing to Turgot that "no man is so industrious but he may add some hours more in the week to his labor; and scarce anyone is so poor but he can retrench something of his expense." No student ever gathers from a study of the individualist economists that the English proletariat was seething in horror and degradation while the riches of the proprietors were increasing by leaps and bounds.


The historical ignorance of the economists did not, however, disable them for the abstract work of scientific political economy. All their most cherished institutions and doctrines succumbed one by one to their analysis of the laws of production and exchange. With one law alone—the law of rent—they destroyed the whole series of assumptions upon which private property is based. The apriorist notion that among free competitors wealth must go to the industrious, and poverty be the just and natural punishment of the lazy and improvident, proved as illusory as the apparent flatness of the earth. Here was a vast mass of wealth called economic rent, increasing with the population, and consisting of the difference between the product of the national industry as it actually was and as it would have been if every acre of land in the country had been no more fertile or favorably situated than the very worst acre from which a bare living could be extracted: all quite incapable of being assigned to this or that individual or class as the return to his or its separate exertions: all purely social or common wealth, for the private appropriation of which no permanently valid and intellectually honest excuse could be made. Ricardo was quite as explicit and far more thorough on the subject than Mr. Henry George. He pointed out—I quote his own words—that "the whole surplus produce of the soil, after deducting from it only such moderate profits as are sufficient to encourage accumulation, must finally rest with the landlord."*25


It was only by adopting a preposterous theory of value that Ricardo was able to maintain that the laborer, selling himself for wages to the proprietor, would always command his cost of production, i.e., his daily subsistence. Even that slender consolation vanished later on before the renewed investigation of value made by Jevons,*26 who demonstrated that the value of a commodity is a function of the quantity available, and may fall to zero when the supply outruns the demand so far as to make the final increment of the supply useless.*27 A fact which the unemployed had discovered, without the aid of the differential calculus, before Jevons was born. Private property, in fact, left no room for new comers. Malthus pointed this out, and urged that there should be no newcomers—that the population should remain stationary. But the population took exactly as much notice of this modest demand for stagnation as the incoming tide took of King Canute's ankles. Indeed the demand was the less reasonable since the power of production per head was increasing faster than the population (as it still is), the increase of poverty being produced simply by the increase and private appropriation of rent. After Ricardo had completed the individualist synthesis of production and exchange, a dialectical war broke out. Proudhon had only to skim through a Ricardian treatise to understand just enough of it to be able to show that political economy was a reductio and absurdum of private property instead of a justification of it. Ferdinand Lassalle, with Ricardo in one hand and Hegel in the other, turned all the heavy guns of the philosophers and economists on private property with such effect that no one dared to challenge his characteristic boasts of the irresistible equipment of Social Democracy in point of culture. Karl Marx,*28 without even giving up the Ricardian value theory,*29 seized on the blue books which contained the true history of the leaps and bounds of England's prosperity, and convicted private property of wholesale spoliation, murder and compulsory prostitution; of plague, pestilence, and famine; battle, murder, and sudden death. This was hardly what had been expected from an institution so highly spoken of. Many critics said that the attack was not fair: no one ventured to pretend that the charges were not true. The facts were not only admitted; they had been legislated upon. Social Democracy was working itself out practically as well as academically. Before I recite the steps of the transition, I will, as a matter of form, explain what Social Democracy is, though doubtless nearly all my hearers are already conversant with it.


What the achievement of Socialism involves economically, is the transfer of rent from the class which now appropriates it to the whole people. Rent being that part of the produce which is individually unearned, this is the only equitable method of disposing of it. There is no means of getting rid of economic rent. So long as the fertility of land varies from acre to acre, and the number of persons passing by a shop window per hour varies from street to street, with the result that two farmers or two shopkeepers of exactly equal intelligence and industry will reap unequal returns from their year's work, so long will it be equitable to take from the richer farmer or shopkeeper the excess over his fellow's gain which he owes to the bounty of Nature or the advantage of situation, and divide that excess or rent equally between the two. If the pair of farms or shops be left in the hands of a private landlord, he will take the excess, and, instead of dividing it between his two tenants, live on it himself idly at their expense. The economic object of Socialism is not, of course, to equalize farmers and shopkeepers in couples, but to carry out the principle over the whole community by collecting all rents and throwing them into the national treasury. As the private proprietor has no reason for clinging to his property except the legal power to take the rent and spend it on himself—this legal power being in fact what really constitutes him a proprietor—its abrogation would mean his expropriation. The socialization of rent would mean the socialization of the sources of production by the expropriation of the present private proprietors, and the transfer of their property to the entire nation. This transfer, then, is the subject matter of the transition to Socialism, which began some forty-five years ago, as far as any phase of social evolution can be said to begin at all.


It will be at once seen that the valid objections to Socialism consist wholly of practical difficulties. On the ground of abstract justice, Socialism is not only unobjectionable, but sacredly imperative. I am afraid that in the ordinary middle-class opinion Socialism is flagrantly dishonest, but could be established off-hand to-morrow with the help of a guillotine, if there were no police, and the people were wicked enough. In truth, it is as honest as it is inevitable; but all the mobs and guillotines in the world can no more establish it than police coercion can avert it. The first practical difficulty is raised by the idea of the entire people collectively owning land, capital, or anything else. Here is the rent arising out of the people's industry: here are the pockets of the private proprietors. The problem is to drop that rent, not into those private pockets, but into the people's pocket. Yes; but where is the people's pocket? Who is the people? what is the people? Tom we know, and Dick: also Harry; but solely and separately as individuals: as a trinity they have no existence. Who is their trustee their guardian, their man of business, their manager, their secretary, even their stakeholder? The Socialist is stopped dead at the threshold of practical action by this difficulty until he bethinks himself of the State as the representative and trustee of the people.*30 Now if you will just form a hasty picture of the governments which called themselves States in Ricardo's day, consisting of rich proprietors legislating either by divine right or by the exclusive suffrage of the poorer proprietors, and filling the executives with the creatures of their patronage and favoritism; if you look beneath their oratorical parliamentary discussions, conducted with all the splendor and decorum of an expensive sham fight; if you consider their class interests, their shameless corruption, and the waste and mismanagement which disgraced all their bungling attempts at practical business of any kind, you will understand why Ricardo, clearly as he saw the economic consequences of private appropriation of rent, never dreamed of State appropriation as a possible alternative. The Socialist of that time did not greatly care: he was only a benevolent Utopian who planned model communities, and occasionally carried them out, with negatively instructive and positively disastrous results. When his successors learned economics from Ricardo, they saw the difficulty quite as plainly as Ricardo's vulgarizers, the Whig doctrinaires who accepted the incompetence and corruption of States as permanent inherent State qualities, like the acidity of lemons. Not that the Socialists were not doctrinaires too; but outside economics they were pupils of Hegel, while the Whigs were pupils of Bentham and Austin. Bentham's was not the school in which men learned to solve problems to which history alone could give the key, or to form conceptions which belonged to the evolutional order. Hegel, on the other hand, expressly taught the conception of the perfect State; and his pupils saw that nothing in the nature of things made it impossible, or even specially difficult, to make the existing State, if not absolutely perfect, at least practically trustworthy. They contemplated the insolent and inefficient government official of their day without rushing to the conclusion that the State uniform had a magic property of extinguishing all business capacity, integrity, and common civility in the wearer. When State officials obtained their posts by favoritism and patronage, efficiency on their part was an accident, and politeness a condescension. When they retained their posts without any effective responsibility to the public, they naturally defrauded the public by making their posts sinecures, and insulted the public when, by personal inquiry, it made itself troublesome. But every successfully conducted private business establishment in the kingdom was an example of the ease with which public ones could be reformed as soon as there was the effective will to find out the way. Make the passing of a sufficient examination an indispensable preliminary to entering the executive; make the executive responsible to the government and the government responsible to the people; and State departments will be provided with all the guarantees for integrity and efficiency that private money-hunting pretends to. Thus the old bugbear of State imbecility did not terrify the Socialist: it only made him a Democrat. But to call himself so simply, would have had the effect of classing him with the ordinary destructive politician who is a Democrat without ulterior views for the sake of formal Democracy—one whose notion of Radicalism is the pulling up of aristocratic institutions by the roots—who is, briefly, a sort of Universal Abolitionist. Consequently, we have the distinctive term Social Democrat, indicating the man or woman who desires through Democracy to gather the whole people into the State, so that the State may be trusted with the rent of the country, and finally with the land,*31 the capital, and the organization of the national industry—with all the sources of production, in short, which are now abandoned to the cupidity of irresponsible private individuals.


The benefits of such a change as this are so obvious to all except the existing private proprietors and their parasites, that it is very necessary to insist on the impossibility of effecting it suddenly. The young Socialist is apt to be catastrophic in his views—to plan the revolutionary program as an affair of twenty-four lively hours, with Individualism in full swing on Monday morning, a tidal wave of the insurgent proletariat on Monday afternoon, and Socialism in complete working order on Tuesday. A man who believes that such a happy despatch is possible, will naturally think it absurd and even inhuman to stick at bloodshed in bringing it about. He can prove that the continuance of the present system for a year costs more suffering than could be crammed into any Monday afternoon, however sanguinary. This is the phase of conviction in which are delivered those Socialist speeches which make what the newspapers call "good copy," and which are the only ones they as yet report. Such speeches are encouraged by the hasty opposition they evoke from thoughtless persons, who begin by tacitly admitting that a sudden change is feasible, and go on to protest that it would be wicked. The experienced Social Democrat converts his too ardent follower by first admitting that if the change could be made catastrophically it would be well worth making, and then proceeding to point out that as it would involve a readjustment of productive industry to meet the demand created by an entirely new distribution of purchasing power, it would also involve, in the application of labor and industrial machinery, alterations which no afternoon's work could effect. You cannot convince any man that it is impossible to tear down a government in a day; but everybody is convinced already that you cannot convert first and third class carriages into second class; rookeries and palaces into comfortable dwellings; and jewelers and dressmakers into bakers and builders, by merely singing the "Marseillaise." No judicious person, however deeply persuaded that the work of the court dressmaker has no true social utility, would greatly care to quarter her idly on the genuinely productive workers pending the preparation of a place for her in their ranks. For though she is to all intents and purposes quartered on them at present, yet she at least escapes the demoralization of idleness. Until her new place is ready, it is better that her patrons should find dressmaking for her hands to do, than that Satan should find mischief. Demolishing a Bastille with seven prisoners in it is one thing: demolishing one with fourteen million prisoners is quite another. I need not enlarge on the point: the necessity for cautious and gradual change must be obvious to everyone here, and could be made obvious to everyone elsewhere if only the catastrophists were courageously and sensibly dealt with in discussion.


What then does a gradual transition to Social Democracy mean specifically? It means the gradual extension of the franchise; and the transfer of rent and interest to the State, not in one lump sum, but by installments. Looked at in this way, it will at once be seen that we are already far on the road, and are being urged further by many politicians who do not dream that they are touched with Socialism—nay, who would earnestly repudiate the touch as a taint. Let us see how far we have gone. In 1832 the political power passed into the hands of the middle class; and in 1838 Lord John Russell announced finality. Meanwhile, in 1834, the middle class had swept away the last economic refuge of the workers, the old Poor Law, and delivered them naked to the furies of competition.*32 Ten years turmoil and active emigration followed; and then the thin end of the wedge went in. The Income Tax was established; and the Factory Acts were made effective. The Income Tax (1842), which is on individualist principles an intolerable spoliative anomaly, is simply a forcible transfer of rent, interest, and even rent of ability, from private holders to the State without compensation. It excused itself to the Whigs on the ground that those who had most property for the State to protect should pay ad valorem for its protection. The Factory Acts swept the anarchic theory of the irresponsibility of private enterprise out of practical politics; made employers accountable to the State for the well-being of their employees; and transferred a further installment of profits directly to the worker by raising wages. Then came the gold discoveries in California (1847) and Australia (1851), and the period of leaps and bounds, supported by the economic rent of England's mineral fertility, which kindled Mr. Gladstone's retrogressive instincts to a vain hope of abolishing the Income Tax. These events relieved the pressure set up by the New Poor Law. The workers rapidly organized themselves in Trades Unions, which were denounced then for their tendency to sap the manly independence which had formerly characterized the British workman,*33 and which are to-day held up to him as the self-helpful perfection of that manly independence. Howbeit, self-help flourished, especially at Manchester and Sheffield; State help was voted grandmotherly; wages went up; and the Unions, like the fly on the wheel, thought that they had raised them. They were mistaken; but the value of Trade Unionism in awakening the social conscience of the skilled workers was immense, though to this there was a heavy set-off in its tendency to destroy their artistic conscience by making them aware that it was their duty to one another to discourage rapid and efficient workmanship by every means in their power. An extension of the Franchise, which was really an installment of Democracy, and not, like the 1832 Reform Bill, only an advance toward it, was gained in 1867; and immediately afterward came another installment of Socialism in the shape of a further transfer of rent and interest from private holders to the State for the purpose of educating the people. In the meantime, the extraordinary success of the post office, which, according to the teaching of the Manchester school, should have been a nest of incompetence and jobbery, had not only shown the perfect efficiency of State enterprise when the officials are made responsible to the class interested in its success, but had also proved the enormous convenience and cheapness of socialistic or collective charges over those of private enterprise. For example, the Postmaster General charges a penny for sending a letter weighing an ounce from Kensington to Bayswater. Private enterprise would send half a pound the same distance for a farthing, and make a handsome profit on it. But the Postmaster General also sends an ounce letter from Land's End to John o' Groat's House for a penny. Private enterprise would probably demand at least a shilling, if not five, for such a service; and there are many places in which private enterprise could not on any terms maintain a post office. Therefore a citizen with ten letters to post saves considerably by the uniform socialistic charge, and quite recognizes the necessity for rigidly protecting the Postmaster's monopoly.


After 1875,*34 leaping and bounding prosperity, after a final spurt during which the Income Tax fell to twopence, got out of breath, and has not yet recovered it. Russia and America, among other competitors, began to raise the margin of cultivation at a surprising rate. Education began to intensify the sense of suffering, and to throw light upon its causes in dark places. The capital needed to keep English industry abreast of the growing population began to be attracted by the leaping and bounding of foreign loans and investments,*35 and to bring to England, in payment of interest, imports that were not paid for by exports—a phenomenon inexpressibly disconcerting to the Cobden Club. The old pressure of the eighteen-thirties came back again; and presently, as if Chartism and Fergus O'Connor had risen from the dead, the Democratic Federation and Mr. H. M. Hyndman appeared in the field, highly significant as signs of the times, and looming hideously magnified in the guilty eye of property, if not of great account as direct factors in the course of events. Numbers of young men, pupils of Mill, Spencer, Comte, and Darwin, roused by Mr. Henry George's Progress and Poverty, left aside evolution and freethought; took to insurrectionary economics; studied Karl Marx; and were so convinced that Socialism had only to be put clearly before the working-classes to concentrate the power of their immense numbers in one irresistible organization, that the Revolution was fixed for 1889—the anniversary of the French Revolution—at latest. I remember being asked satirically and publicly at that time how long I thought it would take to get Socialism into working order if I had my way. I replied, with a spirited modesty, that a fortnight would be ample for the purpose. When I add that I was frequently complimented on being one of the more reasonable Socialists, you will be able to appreciate the fervor of our conviction, and the extravagant levity of our practical ideas. The opposition we got was uninstructive: it was mainly founded on the assumption that our projects were theoretically unsound but immediately possible, whereas our weak point lay in the case being exactly the reverse. However, the ensuing years sifted and sobered us. "The Socialists," as they were called, have fallen into line as a Social Democratic party, no more insurrectionary in its policy than any other party. But I shall not present the remainder of the transition to Social Democracy as the work of fully conscious Social Democrats. I prefer to ignore them altogether—to suppose, if you will, that the Government will shortly follow the advice of the Saturday Review, and, for the sake of peace and quietness, hang them.


First, then, as to the consummation of Democracy. Since 1885 every man who pays four shillings a week rent can only be hindered from voting by anomalous conditions of registration which are likely to be swept away very shortly. This is all but manhood suffrage; and it will soon complete itself as adult suffrage. However, I may leave adult suffrage out of the question, because the outlawry of women, monstrous as it is, is not a question of class privilege, but of sex privilege. To complete the foundation of the democratic State, then, we need manhood suffrage, abolition of all poverty disqualifications, abolition of the House of Lords, public payment of candidature expenses, public payment of representatives, and annual elections.*36 These changes are now inevitable, however unacceptable they may appear to those of us who are Conservatives. They have been for half a century the commonplaces of Radicalism. We have next to consider that the State is not merely an abstraction: it is a machine to do certain work; and if that work be increased and altered in its character, the machinery must be multiplied and altered too. Now, the extension of the franchise does increase and alter the work very considerably; but it has no direct effect on the machinery. At present the State machine has practically broken down under the strain of spreading democracy, the work being mainly local, and the machinery mainly central. Without efficient local machinery the replacing of private enterprise by State enterprise is out of the question; and we shall presently see that such replacement is one of the inevitable consequences of Democracy. A democratic State cannot become a Social-Democratic State unless it has in every center of population a local governing body as thoroughly democratic in its constitution as the central Parliament. This matter is also well in train. In 1888 a Government avowedly reactionary passed a Local Government Bill which effected a distinct advance toward the democratic municipality.*37 It was furthermore a Bill with no single aspect of finality anywhere about it. Local Self-Government remains prominent within the sphere of practical politics. When it is achieved, the democratic State will have the machinery for Socialism.


And now, how is the raw material of Socialism—otherwise the Proletarian man—to be brought to the Democratic State machinery? Here again the path is easily found. Politicians who have no suspicion that they are Socialists, are advocating further installments of Socialism with a recklessness of indirect results which scandalizes the conscious Social Democrat. The phenomenon of economic rent has assumed prodigious proportions in our great cities. The injustice of its private appropriation is glaring, flagrant, almost ridiculous. In the long suburban roads about London, where rows of exactly similar houses stretch for miles countryward, the rent changes at every few thousand yards by exactly the amount saved or incurred annually in traveling to and from the householder's place of business. The seeker after lodgings, hesitating between Bloomsbury and Tottenham, finds every advantage of situation skimmed off by the landlord with scientific precision. As lease after lease falls in, houses, shops, goodwills of businesses which are the fruits of the labor of lifetimes, fall into the maw of the ground landlord. Confiscation of capital, spoliation of households, annihilation of incentive, everything that the most ignorant and credulous fundholder ever charged against the Socialist, rages openly in London, which begins to ask itself whether it exists and toils only for the typical duke and his celebrated jockey and his famous racehorse. Lord Hobhouse and his unimpeachably respectable committee for the taxation of ground values are already in the field claiming the value of the site of London for London collectively; and their agitation receives additional momentum from every lease that falls in. Their case is unassailable; and the evil they attack is one that presses on the ratepaying and leaseholding classes as well as upon humbler sufferers. This economic pressure is reinforced formidably by political opinion in the workmen's associations. Here the moderate members are content to demand a progressive Income Tax, which is virtually Lord Hobhouse's proposal; and the extremists are all for Land Nationalization, which is again Lord Hobhouse's principle. The cry for such taxation cannot permanently be resisted. And it is very worthy of remark that there is a new note in the cry. Formerly taxes were proposed with a specific object—as to pay for a war, for education, or the like. Now the proposal is to tax the landlords in order to get some of our money back from them—take it from them first and find a use for it afterward. Ever since Mr. Henry George's book reached the English Radicals, there has been a growing disposition to impose a tax of twenty shillings in the pound on obviously unearned incomes: that is, to dump four hundred and fifty millions*38 a year down on the Exchequer counter; and then retire with three cheers for the restoration of the land to the people.


The results of such a proceeding, if it actually came off, would considerably take its advocates aback. The streets would presently be filled with starving workers of all grades, domestic servants, coach builders, decorators, jewelers, lace-makers, fashionable professional men, and numberless others whose livelihood is at present gained by ministering to the wants of these and of the proprietary class. "This," they would cry, "is what your theories have brought us to! Back with the good old times, when we received our wages, which were at least better than nothing." Evidently the Chancellor of the Exchequer would have three courses open to him. (1.) He could give the money back again to the landlords and capitalists with an apology. (2.) He could attempt to start State industries with it for the employment of the people. (3.) Or he could simply distribute it among the unemployed. The last is not to be thought of: anything is better than panem et circenses. The second (starting State industries) would be far too vast an undertaking to get on foot soon enough to meet the urgent difficulty.*39 The first (the return with an apology) would be a reductio ad absurdum of the whole affair—a confession that the private proprietor, for all his idleness and his voracity, is indeed performing an indispensable economic function—the function of capitalizing, however wastefully and viciously, the wealth which surpasses his necessarily limited power of immediate personal consumption. And here we have checkmate to mere Henry Georgeism, or State appropriation of rent without Socialism. It is easy to show that the State is entitled to the whole income of the Duke of Westminster, and to argue therefrom that he should straightway be taxed twenty shillings in the pound. But in practical earnest the State has no right to take five farthings of capital from the Duke or anybody else until it is ready to invest them in productive enterprise. The consequences of withdrawing capital from private hands merely to lock it up unproductively in the treasury would be so swift and ruinous, that no statesman, however fortified with the destructive resources of abstract economics, could persist in it. It will be found in the future as in the past that governments will raise money only because they want it for specific purposes, and not on a priori demonstrations that they have a right to it. But it must be added that when they do want it for a specific purpose, then, also in the future as in the past, they will raise it without the slightest regard to a priori demonstrations that they have no right to it.


Here then we have got to a dead lock. In spite of democrats and land nationalizers, rent cannot be touched unless some pressure from quite another quarter forces productive enterprise on the State. Such pressure is already forthcoming. The quick starvation of the unemployed, the slow starvation of the employed who have no relatively scarce special skill, the unbearable anxiety or dangerous recklessness of those who are employed to-day and unemployed to-morrow, the rise in urban rents, the screwing down of wages by pauper immigration and home multiplication, the hand-in-hand advance of education and discontent, are all working up to explosion point. It is useless to prove by statistics that most of the people are better off than before, true as that probably is, thanks to installments of Social Democracy. Yet even that is questionable; for it is idle to claim authority for statistics of things that have never been recorded. Chaos has no statistics: it has only statisticians; and the ablest of them prefaces his remarks on the increased consumption of rice by the admission that "no one can contemplate the present condition of the masses without desiring something like a revolution for the better."*40 The masses themselves are being converted so rapidly to that view of the situation, that we have Pan-Anglican Synods, bewildered by a revival of Christianity, pleading that though Socialism is eminently Christian, yet "the Church must act safely as well as sublimely."*41 During the agitation made by the unemployed last winter (1887-8), the Chief Commissioner of Police in London started at his own shadow, and mistook Mr. John Burns for the French Revolution, to the great delight of that genial and courageous champion of his class.*42 The existence of the pressure is further shown by the number and variety of safety valves proposed to relieve it—monetization of silver, import duties, "leaseholds enfranchisement," extension of joint stock capitalism masquerading as coöperation,*43 and other irrelevancies. My own sudden promotion from the street corner to this platform is in its way a sign of the times. But while we are pointing the moral and adorning the tale according to our various opinions, an actual struggle is beginning between the unemployed who demand work and the local authorities appointed to deal with the poor. In the winter, the unemployed collect round red flags, and listen to speeches for want of anything else to do. They welcome Socialism, insurrectionism, currency craze—anything that passes the time and seems to express the fact that they are hungry. The local authorities, equally innocent of studied economic views, deny that there is any misery; send leaders of deputations to the Local Government Board, who promptly send them back to the guardians; try bullying; try stoneyards; try bludgeoning; and finally sit down helplessly and wish it were summer again or the unemployed at the bottom of the sea. Meanwhile the charity fund, which is much less elastic than the wages fund, overflows at the Mansion House only to run dry at the permanent institutions. So unstable a state of things cannot last. The bludgeoning, and the shocking clamor for bloodshed from the anti-popular newspapers, will create a revulsion among the humane section of the middle class. The section which is blinded by class prejudice to all sense of social responsibility, dreads personal violence from the working class with a superstitious terror that defies enlightenment or control.*44 Municipal employment must be offered at last. This cannot be done in one place alone: the rush from other parts of the country would swamp an isolated experiment. Wherever the pressure is, the relief must be given on the spot. And since public decency, as well as consideration for its higher officials, will prevent the County Council from instituting a working day of sixteen hours at a wage of a penny an hour or less, it will soon have on its hands not only the unemployed, but also the white slaves of the sweater, who will escape from their dens and appeal to the municipality for work the moment they become aware that municipal employment is better than private sweating. Nay, the sweater himself, a mere slave driver paid "by the piece," will in many instances be as anxious as his victims to escape from his hideous trade. But the municipal organization of the industry of these people will require capital. Where is the municipality to get it? Raising the rates is out of the question: the ordinary tradesmen and householders are already rated and rented to the limit of endurance: further burdens would almost bring them into the street with a red flag. Dreadful dilemma! in which the County Council, between the devil and the deep sea, will hear Lord Hobhouse singing a song of deliverance, telling a golden tale of ground values to be municipalized by taxation. The land nationalizers will swell the chorus: the Radical progressive income taxers singing together, and the ratepaying tenants shouting for joy. The capital difficulty thus solved—for we need not seriously anticipate that the landlords will actually fight, as our President*45 once threatened—the question of acquiring land will arise. The nationalizers will declare for its annexation by the municipality without compensation; but that will be rejected as spoliation, worthy only of revolutionary Socialists. The no-compensation cry is indeed a piece of unpractical catastrophic insurrectionism; for while compensation would be unnecessary and absurd if every proprietor were expropriated simultaneously, and the proprietary system at once replaced by full blown Socialism, yet when it is necessary to proceed by degrees, the denial of compensation would have the effect of singling out individual proprietors for expropriation while the others remained unmolested, and depriving them of their private means long before there was suitable municipal employment ready for them. The land, as it is required, will, therefore, be honestly purchased; and the purchase money, or the interest thereon, will be procured, like the capital, by taxing rent. Of course this will be at bottom an act of expropriation just as much as the collection of Income Tax to-day is an act of expropriation. As such, it will be denounced by the landlords as merely a committing of the newest sin the oldest kind of way. In effect, they will be compelled at each purchase to buy out one of their body and present his land to the municipality, thereby distributing the loss fairly over their whole class, instead of placing it on one man who is no more responsible than the rest. But they will be compelled to do this in a manner that will satisfy the moral sense of the ordinary citizen as effectively as that of the skilled economist.


We now foresee our municipality equipped with land and capital for industrial purposes. At first they will naturally extend the industries they already carry on, road making, gas-works, tramways, building, and the like. It is probable that they will for the most part regard their action as a mere device to meet a passing emergency. The Manchester School will urge its Protectionist theories as to the exemption of private enterprise from the competition of public enterprise, in one supreme effort to practice for the last time on popular ignorance of the science which it has consistently striven to debase and stultify. For a while the proprietary party will succeed in hampering and restricting municipal enterprise;*46 in attaching the stigma of pauperism to its service; in keeping the lot of its laborers as nearly as possible down to private competition level in point of hard work and low wages. But its power will be broken by the disappearance of that general necessity for keeping down the rates which now hardens local authority to humane appeals. The luxury of being generous at someone else's expense will be irresistible. The ground landlord will be the municipal milch cow; and the ordinary ratepayers will feel the advantage of sleeping in peace, relieved at once from the fear of increased burdens and of having their windows broken and their premises looted by hungry mobs, nuclei of all the socialism and scoundrelism of the city. They will have just as much remorse in making the landlord pay as the landlord has had in making them pay—just as much and no more. And as the municipality becomes more democratic, it will find landlordism losing power, not only relatively to democracy, but absolutely.


The ordinary ratepayer, however, will not remain unaffected for long. At the very outset of the new extension of municipal industries, the question of wage will arise. A minimum wage must be fixed; and though at first, to avoid an overwhelming rush of applicants for employment, it must be made too small to tempt any decently employed laborer to forsake his place and run to the municipality, still, it will not be the frankly infernal competition wage. It will be, like medieval wages, fixed with at least some reference to public opinion as to a becoming standard of comfort. Over and above this, the municipality will have to pay to its organizers, managers, and incidentally necessary skilled workers the full market price of their ability, minus only what the superior prestige and permanence of public employment may induce them to accept. But while these high salaries will make no more disturbance in the labor market than the establishment of a new joint stock company would, the minimum wage for laborers will affect that market perceptibly. The worst sort of sweaters will find that if they are to keep their "hands," they must treat them at least as well as the municipality. The consequent advance in wage will swallow up the sweater's narrow margin of profit. Hence the sweater must raise the price per piece against the shops and wholesale houses for which he sweats. This again will diminish the profits of the wholesale dealers and shopkeepers, who will not be able to recover this loss by raising the price of their wares against the public, since, had any such step been possible, they would have taken it before. But fortunately for them, the market value of their ability as men of business is fixed by the same laws that govern the prices of commodities. Just as the sweater is worth his profit, so they are worth their profit; and just as the sweater will be able to exact from them his old remuneration in spite of the advance in wages, so they will be able to exact their old remuneration in spite of the advance in sweaters' terms. But from whom, it will be asked, if not from the public by raising the price of the wares? Evidently from the landlord upon whose land they are organizing production. In other words, they will demand and obtain a reduction of rent. Thus the organizer of industry, the employer pure and simple, the entrepreneur, as he is often called in economic treatises nowadays, will not suffer. In the division of the product his share will remain constant; while the industrious wage worker's share will be increased, and the idle proprietor's share diminished. This will not adjust itself without friction and clamor; but such friction is constantly going on under the present system in the opposite direction, i.e., by the raising of the proprietor's share at the expense of the worker's.


The contraction of landlords' incomes will necessarily diminish the revenue from taxation on such incomes. Let us suppose that the municipality, to maintain its revenue, puts on an additional penny in the pound. The effect will be to burn the landlord's candle at both ends—obviously not a process that can be continued to infinity. But long before taxation fails as a source of municipal capital, the municipalities will have begun to save capital out of the product of their own industries.*47 In the market the competition of those industries with the private concerns will be irresistible. Unsaddled with a single idle person, and having, therefore, nothing to provide for after paying their employees except extension of capital, they will be able to offer wages that no business burdened with the unproductive consumption of an idle landlord or shareholder could afford, unless it yielded a heavy rent in consequence of some marked advantage of site. But even rents, when they are town rents, are at the mercy of a municipality in the long run. The masters of the streets and the traffic can nurse one site and neglect another. The rent of a shop depends on the number of persons passing its windows per hour. A skillfully timed series of experiments in paving, a new bridge, a tramway service, a barracks, or a small-pox hospital are only a few of the circumstances of which city rents are the creatures. The power of the municipality to control these circumstances is as obvious as the impotence of competing private individuals. Again, competing private individuals are compelled to sell their produce at a price equivalent to the full cost of production at the margin of cultivation.*48 The municipality could compete against them by reducing prices to the average cost of production over the whole area of municipal cultivation. The more favorably situated private concerns could only meet this by ceasing to pay rent: the less favorably situated would succumb without remedy. It would be either stalemate or checkmate. Private property would either become barren, or it would yield to the actual cultivator of average ability no better an income than could be obtained more securely in municipal employment. To the mere proprietor it would yield nothing. Eventually the land and industry of the whole town would pass by the spontaneous action of economic forces into the hands of the municipality; and, so far, the problem of socializing industry would be solved.


Private property, by cheapening the laborer to the utmost in order to get the greater surplus out of him, lowers the margin of human cultivation, and so raises the "rent of ability." The most important form of that rent is the profit of industrial management. The gains of a great portrait painter or fashionable physician are much less significant, since these depend entirely on the existence of a very rich class of patrons subject to acute vanity and hypochondriasis. But the industrial organizer is independent of patrons: instead of merely attracting a larger share of the product of industry to himself, he increases the product by his management. The market price of such ability depends upon the relation of the supply to the demand: the more there is of it the cheaper it is: the less, the dearer. Any cause that increases the supply lowers the price. Now it is evident that since a manager must be a man of education and address, it is useless to look ordinarily to the laboring class for a supply of managerial skill. Not one laborer in a million succeeds in raising himself on the shoulders of his fellows by extraordinary gifts, or extraordinary luck, or both. The managers must be drawn from the classes which enjoy education and social culture; and their price, rapidly as it is falling with the spread of education and the consequent growth of the "intellectual proletariat," is still high. It is true that a very able and highly trained manager can now be obtained for about £800 a year, provided his post does not compel him to spend two-thirds of his income on what is called "keeping up his position," instead of on his own gratification.*49 Still, when it is considered that laborers receive less than £50 a year, and that the demand for laborers is necessarily vast in proportion to the demand for able managers—nay, that there is an inverse ratio between them, since the manager's talent is valuable in proportion to the quantity of labor he can organize—it will be admitted that £800 a year represents an immense rent of ability. But if the education and culture which are a practically indispensable part of the equipment of competitors for such posts were enjoyed by millions instead of thousands, that rent would fall considerably. Now the tendency of private property is to keep the masses mere beasts of burden. The tendency of Social Democracy is to educate them—to make men of them. Social Democracy would not long be saddled with the rents of ability which have during the last century made our born captains of industry our masters and tyrants instead of our servants and leaders. It is even conceivable that rent of managerial ability might in course of time become negative,*50 astonishing as that may seem to the many persons who are by this time so hopelessly confused amid existing anomalies, that the proposition that "whosoever of you will be the chiefest, shall be servant of all," strikes them rather as a Utopian paradox than as the most obvious and inevitable of social arrangements. The fall in the rent of ability will, however, benefit not only the municipality, but also its remaining private competitors. Nevertheless, as the prestige of the municipality grows, and as men see more and more clearly that the future is to it, able organizers will take lower salaries for municipal than for private employment; while those who can beat even the municipality at organizing, or who, as professional men, can deal personally with the public without the intervention of industrial organization, will pay the rent of their places of business either directly to the municipality, or to the private landlord whose income the municipality will absorb by taxation. Finally, when rents of ability had reached their irreducible natural level, they could be dealt with by a progressive Income Tax in the very improbable case of their proving a serious social inconvenience.


It is not necessary to go further into the economic detail of the process of the extinction of private property. Much of that process as sketched here may be anticipated by sections of the proprietary class successively capitulating, as the net closes about their special interests, on such terms as they may be able to stand out for before their power is entirely broken.*51


We may also safely neglect for the moment the question of the development of the House of Commons into the central government which will be the organ for federating the municipalities, and nationalizing inter-municipal rents by an adjustment of the municipal contributions to imperial taxation: in short, for discharging national as distinct from local business. One can see that the Local Government Board of the future will be a tremendous affair; that foreign States will be deeply affected by the reaction of English progress; that international trade, always the really dominant factor in foreign policy, will have to be reconsidered from a new point of view when profit comes to be calculated in terms of net social welfare instead of individual pecuniary gain; that our present system of imperial aggression, in which, under pretext of exploration and colonization, the flag follows the filibuster and trade follows the flag, with the missionary bringing up the rear, must collapse when the control of our military forces passes from the capitalist class to the people; that the disappearance of a variety of classes with a variety of what are now ridiculously called "public opinions" will be accompanied by the welding of society into one class with a public opinion of inconceivable weight; that this public opinion will make it for the first time possible effectively to control the population; that the economic independence of women, and the supplanting of the head of the household by the individual as the recognized unit of the State, will materially alter the status of children and the utility of the institution of the family; and that the inevitable reconstitution of the State Church on a democratic basis may, for example, open up the possibility of the election of an avowed Freethinker like Mr. John Morley or Mr. Bradlaugh to the deanery of Westminster. All these things are mentioned only for the sake of a glimpse of the fertile fields of thought and action which await us when the settlement of our bread and butter question leaves us free to use and develop our higher faculties.


This, then, is the humdrum program of the practical Social Democrat to-day. There is not one new item in it. All are applications of principles already admitted, and extensions of practices already in full activity. All have on them that stamp of the vestry which is so congenial to the British mind. None of them compel the use of the words Socialism or Revolution: at no point do they involve guillotining, declaring the Rights of Man, swearing on the altar of the country, or anything else that is supposed to be essentially un-English. And they are all sure to come—landmarks on our course already visible to far-sighted politicians even of the party which dreads them.


Let me, in conclusion, disavow all admiration for this inevitable, but sordid, slow, reluctant, cowardly path to justice. I venture to claim your respect for those enthusiasts who still refuse to believe that millions of their fellow creatures must be left to sweat and suffer in hopeless toil and degradation, while parliaments and vestries grudgingly muddle and grope toward paltry installments of betterment. The right is so clear, the wrong so intolerable, the gospel so convincing, that it seems to them that it must be possible to enlist the whole body of workers—soldiers, policemen, and all—under the banner of brotherhood and equality; and at one great stroke to set Justice on her rightful throne. Unfortunately, such an army of light is no more to be gathered from the human product of nineteenth century civilization than grapes are to be gathered from thistles. But if we feel glad of that impossibility; if we feel relieved that the change is to be slow enough to avert personal risk to ourselves; if we feel anything less than acute disappointment and bitter humiliation at the discovery that there is yet between us and the promised land a wilderness in which many must perish miserably of want and despair: then I submit to you that our institutions have corrupted us to the most dastardly degree of selfishness. The Socialists need not be ashamed of beginning as they did by proposing militant organization of the working classes and general insurrection. The proposal proved impracticable; and it has now been abandoned—not without some outspoken regrets—by English Socialists. But it still remains as the only finally possible alternative to the Social Democratic program which I have sketched to-day.*52

Notes for this chapter

An address delivered on the 7th September, 1888, to the Economic Section of the British Association at Bath.
Many and many an American town as well as city knows men who, personally spotless in character, build churches and found libraries, and for every "public benefaction" cut down the wages of their employees.—Am. Ed.
Explained in the first essay in this volume.
See page 46-50.
Principles of Political Economy, chap. xxiv., p. 202.
Theory of Political Economy. By W. Stanley Jevons (London. Macmillan and Co.). See also The Alphabet of Economic Science. Part by Philip H. Wicksteed. (Same publishers.)
See pp. 137-144 ante.
See Capital, by Karl Marx. (Humboldt Publishing Co.)
As do few of the American Socialists.—Am. Ed.
To a large extent the State should be the people themselves, the people organized. Socialism should make much of the Saxon Folk Mote, the New England township idea.—Am. Ed.
In America, land will be last in the order of nationalization.—Am. Ed.
The general impression that the old Poor Law had become an indefensible nuisance is a correct one. All attempts to mitigate Individualism by philanthropy instead of replacing it by Socialism are foredoomed to confusion.
See Final Report of Royal Commission on Trade Unions, 1869. Vol. i., p. xvii, sec. 46.
See Mr. Robert Giffen's address on "The Recent Rate of Material Progress in England." Proceedings of the British Association at Manchester in 1887, page 806.
See Mr. Robert Giffen on Import and Export Statistics, Essays on Finance, Second Series, p. 194. (London: G. Bell and Sons. 1886.)
It is a mistake, however, hence to infer that the Socialism of Industry must wait till the governmental machinery be made full and perfect. Socialism will help purify and perfect the machine.—Am. Ed.
This same Government, beginning to realize what it has unintentionally done for Social Democracy, is already (1889) doing what it can to render the new County Councils socialistically impotent by urgently reminding them of the restrictions which hamper their action.
The authority for this figure will be found in Fabian Tract No. 5, Facts for Socialists.
We believe that municipalities and townships should begin to employ the unemployed now.—Am. Ed.
Mr. R. Giffen, Essays in Finance, Second series, p. 393.
Proceedings of the Pan-Anglican Synod: Lambeth, 1888. Report of Committee on Socialism.
Finally, the Commissioner was superseded; and Mr. Burns was elected a member of the first London County Council by a large majority.
It is due to the leaders of the Coöperative movement to say here that they are no parties to the substitution of dividend-hunting by petty capitalists for the pursuit of the ideal of Robert Owen, the Socialist founder of Coöperation; and that they are fully aware that Coöperation must be a political as well as a commercial movement if it is to achieve a final solution of the labor question.
Ample material for a study of West End mob panic may be found in the London newspapers of February, 1886, and November, 1887.
Lord Bramwell, President of the Economic Section of the British Association in 1888.
See note, p. 232.
In one western American city, the mayor declares that its already largely remunerative electric light plant will soon enable it to do away with all taxes of any description whatsoever.—Am. Ed.
The meaning of these terms will be familiar to readers of the fourth essay.
See note, p. 148.
That is, the manager would receive less for his work than the artisan. Cases in which the profits of the employer are smaller than the wages of the employee are by no means uncommon in certain grades of industry where small traders have occasion to employ skilled workmen.
Such capitulations occur already when the Chancelor of the Exchequer takes advantage of the fall in the current rate of interest (explained on page 149) to reduce Consols. This he does by simply threatening to pay off the stockholders with money freshly borrowed at the current rate. They, knowing that they could not reinvest the money on any better terms than the reduced ones offered by the Chancelor, have to submit. There is no reason why the municipalities should not secure the same advantage for their constituents. For example, the inhabitants of London now pay the shareholders of the gas companies a million and a half annually, or 11 per cent. on the £13,650,000 which the gas works cost. The London County Council could raise that sum for about £400,000 a year. By threatening to do this and start municipal gas works, it could obviously compel the shareholders to hand over their works for £400,000 a year, and sacrifice the extra 8 per cent. now enjoyed by them. The saving to the citizens of London would be £1,100,000 a year, sufficient to defray the net cost of the London School Board. Metropolitan readers will find a number of cognate instances in Fabian Tract No. 8, "Facts for Londoners."
In America the choice comes between evolutionary Socialism, Plutocracy, or Chaos and Rapine. Competition or combination is not the question. Competition is disappearing. The only question is what kind of a combination we shall have, plutocratic or democratic. Socialism or Jay Gould, this is the question.—Am. Ed.

The Transition to Social Democracy, The Outlook, by Hubert Bland

End of Notes

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