Front Page Titles (by Subject) 4: The Significance of Monopoly in Primary Production - Socialism: An Economic and Sociological Analysis
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4: The Significance of Monopoly in Primary Production - Ludwig von Mises, Socialism: An Economic and Sociological Analysis 
Socialism: An Economic and Sociological Analysis, trans. J. Kahane, Foreword by F.A. Hayek (Indianapolis: Liberty Fund, 1981).
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The Significance of Monopoly in Primary Production
In an economy based on private ownership in the means of production, specific primary production is the only field liable to monopolization without special protection from the State. Monopolies in certain branches of primary production are possible. Mining, in the widest sense of the word, is their true domain. Where today we have monopolistic structures which do not spring from government intervention, they are—a part from such instances as the railway company and the power works—almost exclusively organizations built up on a power to dispose of certain kinds of natural resources. These natural resources must be such as are found in relatively few places, for this alone makes the monopoly possible. A world monopoly of potato farmers or milk producers is unthinkable.33 Potatoes and milk, or at least substitutes for them, can be produced over the greater part of the earth’s surface. World monopolies of oil, mercury, zinc, nickel, and other materials can occasionally be formed if the owners of the rare places where they exist can combine; examples of this are found in the history of recent years.
When such a monopoly is formed the higher monopoly price replaces the competitive price. The income of mine owners rises, production and consumption of their product fall. A quantity of capital and labour which would otherwise have been active in this branch of production is diverted to other fields. If we consider the effects of monopoly from the standpoint of the separate branches of world economy we see only the rise in the monopolists’ income and the corresponding decline in the income of all other branches. Considered, however, from the standpoint of world economy and subspecie aeternitatis (from the point of view of eternity), monopolies would appear to economize consumption of irreplaceable natural resources. People come to deal more thriftily with these precious resources when as in mining, the monopoly price occasionally replaces the competitive price and they are driven to do less digging and more working up. Since in every mine in operation nature’s irreplaceable gift to man is being used up, the less we touch this stock the better we provide for the supply of coming generations. We see now what it means when people detect in monopoly a conflict between social productivity and private profit. True, a socialist community would have no occasion to restrict production as Capitalism does under monopolies, but this would only mean that Socialism would deal less thriftily with irreplaceable natural treasures, that it would sacrifice the future to the present.
When we find that monopoly causes a conflict between profit and productivity which is not to be found anywhere else, we do not necessarily say that the effects of monopoly are pernicious. The naive assumption that the behavior of the socialist community—as typifying the idea of productivity—constitutes the Absolute Good is quite arbitrary. We have no standard on which to base a valid decision between what is good and what is evil in this context.
If, then, we consider the effects of monopoly without being biased by popular writers on cartels and trusts, we can discover nothing which could justify the assertion that growing monopolization makes the capitalist system intolerable. The monopolist’s scope in a capitalist economy free from state interference is much smaller than this type of writer commonly assumes; and the consequences of monopoly must be judged by other standards than the mere catchwords Price Dictation and the Rule of the Trust Magnates.
SOCIALISM AS A MORAL IMPERATIVE
Socialism and Ethics
The Socialist Attitude to Ethics
For pure Marxism Socialism is not a political programme. It does not demand that society shall be transformed into the socialist order, nor does it condemn the liberal order of society. It presents itself as a scientific theory which claims to have discovered in the dynamic laws of historical development a movement towards the socialization of the means of production. To say that pure Marxism pronounces itself in favour of Socialism or that it desires Socialism or wishes to bring it about would be just as absurd as to say that Astronomy wishes or thought it desirable to bring about a solar eclipse which it had predicted. We know that Marx’s life and even many of his writings and sayings sharply contradict his theoretic outlook and that the Socialism of resentment is always showing its cloven hoof. In practical politics at least, his supporters have long since forgotten what they owe strictly to his doctrine. Their words and deeds go far beyond what the “midwife theory” permits.1 This, however, is of secondary importance for our study, which here deals only with the doctrine pure and undefiled.
Besides the pure Marxist view that Socialism must come of inexorable Necessity, there are two other motives which guide the advocates of Communism. They are socialists either because they expect socialist society to increase productivity, or because they believe that a socialist society would be more just. Marxism is unable to reconcile itself to ethical Socialism. But its attitude to economic-rationalist Socialism is quite different: it is possible to interpret the materialistic conception of history as meaning that the trend of economic development naturally leads to the most productive type of economy, that is to say Socialism. Of course, this view is very different from that held by the majority of Marxists. They are for Socialism, firstly because it is bound to come in any case, secondly because it is morally preferable, and finally because it involves more rational economic organization.
The two motives of non-Marxian Socialism are mutually exclusive. If a man advocates Socialism because he expects it to increase the productivity of social labour he need not try to bolster up his demands with a higher moral valuation of the socialist order. If he elects to do so, he is open to the question whether he would be prepared to advocate Socialism if he discovered that it was after all not the morally perfect order. On the other hand it is clear that one who advocates the socialistic order for moral reasons would have to go on doing so even if he were convinced that the order based on private ownership in the means of production yielded greater productivity of labour.
Eudaemonistic Ethics and Socialism
To eudaemonism, which looks at social phenomena rationalistically, the very way in which ethical Socialism states its problems seems unsatisfactory. Unless Ethics and “Economy” are regarded as two systems of objectivization which have nothing to do with each other, then ethical and economic valuation and judgment cannot appear as mutually independent factors. All ethical ends are merely a part of human aims. This implies that on the one hand the ethical aim is a means, in so far as it assists in the human struggle for happiness, but that on the other hand it is comprised in the process of valuation which unites all intermediate aims into a unitary scale of values and grades them according to their importance. The conception of absolute ethical values, which might be opposed to economic values, cannot therefore be maintained.
Of course one cannot discuss this point with the ethical apriorist or the intuitionist. Those who uphold the Moral as ultimate fact, and who rule out scientific examination of its elements by referring to a transcendental origin, will never be able to agree with those who are dragging down the concept of Right into the dust of scientific analysis. Ethical ideas of duty and conscience demand nothing less than the blindest submission.2A priori ethics, claiming unconditional validity for its norms, approaches all earthly relations from the outside and aims at transmuting them into its own form with no concern whatever for the consequences. Fiat iustitia, pereat mundus (let justice be done even though the world be destroyed) is its motto, and it is when it becomes honestly indignant about the eternally misunderstood plea, “the end justifies the means,” that it is most sincere.
Isolated man settles all his ends according to his own law. He sees and knows nothing but himself and arranges his actions accordingly. In society, however, he must temper his actions to the fact that he lives in society and that his actions must affirm the existence and progress of society. From the basic law of social life it follows that he does not do this to achieve aims lying outside his own personal system of ends. In making the social ends his own he does not thereby subordinate his personality and his wishes to those of a higher personality or renounce the fulfilment of any of his own desires in favour of those of a mystical universe. For, from the standpoint of his own valuation, social ends are not ultimate but intermediate in his own scale of values. He must accept society because social life helps him to fulfil his own wishes more completely. If he denied it he would be able to create only transitory advantages for himself; by destroying the social body he would in the long run injure himself.
The idea of a dualism of motivation assumed by most ethical theorists, when they distinguish between egoistic and altruistic motives of action, cannot therefore be maintained. This attempt to contrast egoistic and altruistic action springs from a misconception of the social interdependence of individuals. The power to choose whether my actions and conduct shall serve myself or my fellow beings is not given to me—which perhaps may be regarded as fortunate. If it were, human society would not be possible. In the society based on division of labour and co-operation, the interests of all members are in harmony, and it follows from this basic fact of social life that ultimately action in the interests of myself and action in the interest of others do not conflict, since the interests of individuals come together in the end. Thus the famous scientific dispute as to the possibility of deriving the altruistic from the egoistic motives of action may be regarded as definitely disposed of.
There is no contrast between moral duty and selfish interests. What the individual gives to society to preserve it as society, he gives, not for the sake of aims alien to himself, but in his own interest.3 The individual, who is a product of society not only as a thinking, willing, sentient man, but also simply as a living creature, cannot deny society without denying himself.
This position of social ends in the system of individual ends is perceived by the individual’s reason, which enables him to recognize aright his own interests. But society cannot always trust the individual to see which are his true interests. If it left everyone to judge of his own it would expose itself to the caprice of every foolish, sick, and weak-willed person, leaving him free to put its very existence into question, thus imperilling the continuity of development. This is what led to the creation of powers of social coercion which, vis-à-vis the individual, appear as external constraints because they demand imperative obedience. And here we see the social significance of the State and the Law. They are not something outside the individual, demanding from him actions which run counter to his own interests, forcing him to serve alien purposes. They merely prevent the misguided, asocial individual, blind to his own interests, from injuring his fellow men by a revolt against the social order.
It is therefore absurd to maintain that Liberalism, Utilitarianism and Eudaemonism are “inimical to the State.” They reject the idea of Etatism, which under the name State adores as God a mysterious being not comprehensible to human understanding; they dissent from Hegel, to whom the State is “divine will”; they reject the Hegelian Marx and his school who have replaced the cult of “State” with the cult of “Society”; they combat all those who want the State or “Society” to perform tasks other than those corresponding to that social order which they themselves believe the most proper to the end in view. Because they favour private ownership in the means of production they demand that the State coercive apparatus shall be directed to maintain this, and they reject all proposals intended to restrict or abolish private property. But never for a moment do they think of “abolishing the State.” The liberal conception of society by no means omits the apparatus of the State; it assigns to this the task of safeguarding life and property. Anybody who calls opposition to State railways, State theatres, or State dairies “enmity to the State” must be deeply enmeshed indeed in the realistic (in the scholastic sense) conception of the State.
Occasionally society can prevail against the individual even without coercion. Not every social norm requires that the most extreme coercive measures shall at once be put into force. In many things, morals and custom can wring from the individual a recognition of social aims without assistance from the sword of justice. Morals and customs go further than State law in so far as they protect more extensive social aims. In this respect, there may be a difference in extent between them, but no incompatibility of principle. Essential contrasts between the legal order and moral laws occur only where the two derive from different conceptions of the social order, that is, where they appertain to different social systems. The contrast is then dynamic, not static.
The ethical valuation “good” or “evil” can be applied only in respect of ends towards which action strives. As Epicurus said: “Αδιχία ού χαθ́ ὲαυτην χαχόν” (“Vice without injurious consequences would not be vice.”)4 Since action is never its own end, but rather the means to an end, we call an action good or evil only in respect of the consequences of the action. It is judged according to its place in the system of cause and effect. It is valued as a means. And for the value of the means the valuation of the end is decisive. Ethical, like all other, valuation proceeds from valuation of ends, of the ultimate good. The value of an action is the value of the end it serves. Intention, too, has value in so far as it leads to action.
Unity of action can exist only when all ultimate values can be brought into a unitary scale of values. If this were not possible, man would always be finding himself in a position where he could not act, that is, work as a creature conscious of his striving towards a goal; he would have to abandon the issue to forces beyond his control. Conscious scaling of values precedes every human action. The man who chooses to attain A while renouncing B, C, D, etc., has decided that in the given circumstances the attainment of A is more valuable to him than the attainment of the others.
Philosophers had been arguing about this ultimate Good for a long time before it was settled by modern investigation. At the present day Eudaemonism is no longer open to attack. In the long run all the arguments which philosophers from Kant to Hegel brought against it were unable to dissociate the concept Morality from that of Happiness. Never in history has more intellect and ingenuity been expended in defending an untenable position. We are lost in admiration of the magnificent performance of these philosophers. We might almost say that what they have done to prove the impossible elicits more admiration than the achievements of the great thinkers and sociologists who have made Eudaemonism and Utilitarianism a permanent possession of the human mind. Certainly their efforts were not in vain. Their gigantic struggle for anti-eudaemonistic ethics were necessary to expose the problem in all its wide ramifications and so enable a conclusive solution to be reached.
Since the tenets of intuitionist ethics, which are irreconcilable with scientific method, have been deprived of their very foundations, anyone who recognizes the eudaemonistic character of all ethical valuation is exempt from further discussion of ethical Socialism. For such a one the Moral does not stand outside the scale of values which comprises all values of life. For him no moral ethic is valid per se. He must first be allowed to inquire why it is so rated. He can never reject that which has been recognized as beneficial and reasonable simply because a norm, based on some mysterious intuition, declares it to be immoral—a norm the sense and purpose of which he is not entitled even to investigate.5 His principle is not fiat iustitia, pereat mundus, (let justice be done, though the world perish), but fiat iustitia, ne pereat mundus (let justice be done, lest the world perish).
If nevertheless it appears not entirely superfluous to discuss separately the arguments of ethical Socialism, this is not merely because it counts many adherents, but, what is more important, because it provides an opportunity of showing how eudaemonistic ideas lie concealed in every train of aprioristic-intuitive ethical thought, and how this system can be traced back, in every one of its utterances, to untenable notions of economic conduct and of social co-operation. Every ethical system built up on the idea of duty, even though it exhibits itself as strictly as Kant’s, is finally obliged to yield so much to Eudaemonism that its principles can no longer be maintained.6 In the same way every single requirement of aprioristic-intuitive ethics displays ultimately an eudaemonistic character.
A Contribution to the Understanding of Eudaemonism
Formalist ethics takes its differences with Eudaemonism altogether too lightly when it interprets the happiness of which the latter speaks as satisfaction of sensual desires. More or less consciously, formalistic ethics foists upon Eudaemonism the assertion that all human striving is directed solely towards filling the belly and the basest forms of sensual enjoyment. It is of course not to be denied that the thoughts and endeavors of many, very many people are concentrated on these things. This, however, is no fault of social science, which merely points it out as a fact. Eudaemonism does not advise men to strive after happiness; it merely shows that human striving necessarily tends in this direction. And after all, happiness is not to be found only in sexual enjoyment and a good digestion.
The energistic conception of the Moral sees the highest good in fulfilling oneself, in the full exercise of one’s own powers, and this is perhaps only another way of saying what eudaemonists have in mind when they speak of happiness. The happiness of the strong and the healthy certainly does not lie in idle dreaming. But when this conception is contrasted with Eudaemonism it becomes untenable. What are we to make of Guyau when he says: “Life is not calculation, but action. In every living being there is a store of strength, a surplus of energy, which strives to spend itself, not for the sake of the accompanying pleasurable sensations but because it must spend itself ... Duty derives from strength, which necessarily urges towards action.”7 Action means working with a conscious end, that is, on a basis of reflection and calculation. Guyau is guilty of a lapse into intuitionism, which he otherwise rejects, when he represents a mysterious urge as the guide of moral action. In the idées-forces of Fouillée the intuitionist element is still more clearly revealed.8 What was thought is supposed to urge towards realization. But presumably this is only when the end, which the action serves, seems desirable. To the question why an end appears good or evil, however, Fouillée offers no reply.
Nothing is gained when the teacher of morals constructs an absolute ethic without reference to the nature of man and his life. The declamations of philosophers cannot alter the fact that life strives to live itself out, that the living being seeks pleasure and avoids pain. All one’s scruples against acknowledging this as the basic law of human actions fall away as soon as the fundamental principle of social co-operation is recognized. That everyone lives and wishes to live primarily for himself does not disturb social life but promotes it, for the higher fulfilment of the individual’s life is possible only in and through society. This is the true meaning of the doctrine that egoism is the basic law of society.
The highest demand that Society makes of the individual is the sacrifice of his life. Though all other restrictions of his action which the individual has to accept from society may be considered ultimately in his own interests, this, says the anti-eudaemonistic ethic, can be explained by no method which smooths over the opposition between individual and general interests. The hero’s death may be useful to the community, but that is no great consolation to him. Only an ethic based on duty could help one over this difficulty. On closer considerations we see that this objection may be easily disproved. When society’s existence is threatened, each individual must risk his best to avoid destruction. Even the prospect of perishing in the attempt can no longer deter him. For there is then no choice between either living on as one formerly lived or sacrificing oneself for one’s country, for society, or for one’s convictions. Rather, must the certainty of death, servitude, or insufferable poverty be set against the chance of returning victorious from the struggle. War carried on pro aris et focis (for our altars and our hearths) demands no sacrifice from the individual. One does not engage in it merely to reap benefits for others, but to preserve one’s own existence. This of course, is only true of wars in which individuals fight for their very existence. It is not true of wars which are merely a means of enrichment, such as the quarrels of feudal lords or the cabinet wars of princes. Thus Imperialism, ever covetous of conquests, cannot do without an ethic which demands from the individual “sacrifices” for the “good of the State.”
The long fight carried on by moralists against the convenient eudaemonistic explanation of the Moral finds its counterpart in the efforts of economists to solve the problem of economic value otherwise than through the utility of consumption goods. Economists had nothing nearer to hand than the idea of value as reflecting in some way the significance of a commodity to human welfare, nevertheless the attempt to explain the phenomena of value with the help of this concept has been given up again and again and other theories of value have been persistently sought. This is because of the difficulties presented by the problem of the quantity of value. There was, for instance, the apparent contradiction that precious stones, satisfying an obviously minor want, have a higher value than bread, which satisfies one of the most important needs, and that air and water, without which man simply cannot live, are generally without value. The basis for erecting a theory of value on the utility of goods was laid only when the idea of a scale of importance of classes of wants was separated from that of the concrete wants themselves, and the fact recognized that the scale according to which the importance of the wants depending on the power to dispose of goods is judged, is that of the concrete wants themselves.9
The difficulty which the utilitarian-eudaemonistic explanation of the Moral had to overcome was not less than that with which economic theory had to fight in the effort to trace economic values back to utility. No one could discover how to bring eudaemonistic doctrine into harmony with the obvious fact that moral action consists just in the individual’s avoiding actions which seem directly useful to him and doing that which seems directly harmful to him. Liberal social philosophy was the first to find the solution. It showed that by maintaining and developing the social bond each individual serves his highest interest, so that the sacrifices made in the fulfilment of social life are only temporary ones. He exchanges a smaller direct advantage for a considerably greater indirect advantage. Thus duty and interest coincide.10 This is the meaning of the harmony of interests of which the liberal theory of society speaks.
Socialism as an Emanation of Asceticism
The Ascetic Point of View
Withdrawal from the world and denial of life are, even from the religious point of view, not ultimate ends, pursued for their own sakes, but means to the attainment of certain transcendental ends. But though they appear in the believer’s universe as means, they must be regarded as ultimate ends by an inquiry which cannot go beyond the limits of this life. In what follows, we shall mean by asceticism only that which is inspired by a philosophy of life or by religious motives. With these restrictions, asceticism is the subject of our study. We must not confuse it with that kind of asceticism which is only a means to certain earthly ends. If he is convinced of the poisonous effects of liquor, a man abstains from it either to protect his health generally or to steel his strength for a special effort. He is no ascetic in the sense defined above.
Nowhere has the idea of withdrawal from the world and denial of life been manifested more logically and completely than in the Indian religion of Jainism, which is able to look back on a history of 2500 years. “Homelessness,” said Max Weber, “is the fundamental idea of salvation in Jainism. It means the breaking off of all earthly relations, and therefore, above all, indifference to general impressions and avoidance of all worldly motives, the ceasing to act, to hope, to desire. A man who has only the capacity left to feel and think ’I am I’ is homeless in this sense. He wishes neither life nor death—because in either case it would mean desire, and that might wake Karma. He neither has friends nor raises objections to the actions of others towards him (for example, to the usual washing of feet which the pious person performs for the saint). He behaves according to the principle that one should not resist evil and that the individual’s state of grace during life must be tested by his capacity to bear trouble and pain.”11 Jainism prohibits most strictly any killing of living beings. Orthodox Jains burn no light during the dark months because it would burn the moths, make no fire because it would kill insects, strain the water before boiling it, wear a mouth and nose veil to prevent themselves from inhaling insects. It is the highest piety to let oneself be tortured by insects without driving them away.12
Only a section of society can realize the ideal of ascetic living, for the ascetic cannot be a worker. The body that is exhausted by penitential exercises and castigations can do nothing but lie in passive contemplation and let things come to it or consume the rest of its strength in ecstatic trances and thus hasten the end. The ascetic who embarks on work and economic activity to earn for himself only the smallest quantity of the necessities of life abandons his principles. The history of monasticism, not only of Christian monasticism, reveals this. From being abodes of asceticism the monasteries sometimes became the seat of a refined enjoyment of life.
The non-working ascetic can only exist if asceticism is not obligatory for all. Since he cannot nourish himself without the labour of others, labourers must exist on whom he may live.13 He needs tributary laymen. His sexual abstinence requires laymen who will bear successors. If this necessary complement is lacking, the race of ascetics quickly dies out. As a general rule of conduct asceticism would mean the end of the human race. The holocaust of his own life is the end towards which the individual ascetic strives, and though this principle may not include abstinence from all actions necessary to maintain life with the object of putting a premature end to it, it implies, by suppression of the sexual desire, the destruction of society. The ascetic ideal is the ideal of voluntary death. That no society can be built on the ascetic principle is too obvious to need closer explanation. For it is a destroyer of society and life.
This fact can be overlooked only because the ascetic ideal is seldom thought out, and still more seldom carried out, to its logical conclusion. The ascetic in the forest who lives like the animals on roots and herbs is the only one who lives and acts according to his principles. This strictly logical behaviour is rare; there are, after all, not many people who are prepared to renounce light-heartedly the fruits of culture, however much they may despise them in thought and abuse them in words, few who are willing to return without more ado to the way of life of the deer and the stag. St. Aegidius, one of St. Francis’s most zealous companions, found fault with the ants because they were too much preoccupied with collecting supplies; he approved only of the birds, because they do not store food in barns. For the birds in the air, the animals on earth, the fish in the sea, are satisfied when they have sufficient nourishment. He himself believed that he lived according to the same ideal when he fed himself with the labour of his hands and the collection of alms. When he went gleaning with the rest of the poor at harvest-time, and people wanted to add to his gleanings, he would refuse saying: “I have no barn for storing. I do not wish for one.” Yet this saint did derive advantages from the economic order he condemned. His life in poverty, possibly only in and by this economic order, was infinitely better off than that of the fishes and birds he believed he was imitating. He received income for his labour out of the stores of an ordered economy. If others had not gathered in barns the saint would have gone hungry. Only if everybody else had taken the fish as their example, could he have known what it was to live like a fish. Critically disposed contemporaries recognized this. The English Benedictine, Matthew Paris, reports that Pope Innocent III advised St. Francis, after listening to his rule, to go to the swine, whom he resembled more than men, to roll with them in the mud, and to teach his rule to them.14
Ascetic morals can never have universal application as binding principles of life. The ascetic who acts logically passes voluntarily out of the world. Asceticism which seeks to maintain itself on earth does not carry its principles to the logical end; it stops at a certain point. It is immaterial by what sophistry it tries to explain this; it is sufficient that it does so and must do so. Moreover, it is compelled at least to tolerate non-ascetics. By thus developing a double morality, one for saints, one for worldlings, it splits ethics in two. The only truly moral folk are the monks, or whatever else they may be called, who strive for perfection by asceticism. By splitting morality in this way asceticism renounces its claim to rule life. The only demand that it still ventures to make upon laymen is for small donations to keep the saint’s body and soul together.
As a strict ideal, asceticism knows no satisfaction of wants at all. It is therefore non-economic in the most literal sense. The watered-down ideal of asceticism, conceived by the laymen of a society that reveres the asceticism of the perfect, or by monks living in a self-sufficient community, may demand only the most primitive hand to mouth production, but it by no means opposes the extreme rationalization of economic activity. On the contrary, it demands this. For, since all preoccupation with worldly matters keeps people away from the only purely moral way of life and is to be tolerated at all only as a means to an intermediate—unfortunately unavoidable—purpose, then it is essential that this unholy activity should be as economical as possible, so as to reduce it to a minimum. Rationalization, desirable to the worldling in his efforts to reduce painful and increase pleasant sensations, is imposed upon the ascetic, to whom the painful sensations aroused by work and privation are valuable castigations, because it is his duty to devote himself to the transitory no longer than is absolutely necessary.
From the ascetic point of view too, therefore, socialistic production cannot be preferred to the capitalistic unless it is held to be more rational. Asceticism may recommend its devotees to limit the activities by which they satisfy their wants because it abhors a too comfortable existence. But within the limits which it leaves for the satisfaction of these wants, it cannot regard as right anything but what rational economy demands.
Asceticism and Socialism
Socialist thought at first cold-shouldered all principles of asceticism. It harshly rejected any consoling promise of a life after death and aimed at an earthly paradise for everybody. Neither the world to come nor any other religious inducements have any interest for it. Socialism’s one aim was to guarantee that everyone should reach the highest standard of well-being attainable. Not self-denial, but enjoyment was its criterion. Socialist leaders have always definitely opposed all those who show themselves indifferent to the increase in productivity. They have pointed out that, to lessen the hardships of labour and increase the pleasures of enjoyment, the productivity of human labour must be multiplied. The grandiose gestures of degenerate scions of wealthy families in praise of the charms of poverty and the simple life made no appeal to them.
But on looking into this more closely, we may detect a gradual change in their attitude. In proportion as the uneconomic nature of socialistic production becomes apparent, socialists are beginning to transform their views on the desirability of a more abundant satisfaction of human wants. Many of them are even beginning to show some sympathy with writers who praise the Middle Ages and look with contempt on the riches which Capitalism adds to the means of existence.15
The assertion that we could be happy, or even happier, with fewer goods can no more be refuted than it can itself be proved. Of course, most people imagine that they have not enough material goods; and, because they value the increase of well-being that greater exertions on their part can bring more than they value the leisure which they would gain by renouncing it, they exhaust themselves by laborious work. But even if we admit the assertions of those semi-ascetics whose outlook we have been discussing, this by no means commits us to giving the socialist method of production precedence over the capitalist. For supposing too many goods are produced under Capitalism, the matter could be remedied quite simply by reducing the quantity of work to be done. The demand that we should reduce the productivity of labour by adopting a less fruitful way of production cannot be justified by such arguments.
Christianity and Socialism
Religion and Social Ethics
Religion, not merely as a church but as a philosophy too, is like any other raft of spiritual life, a product of men’s social co-operation. Our thinking is by no means an individual phenomenon independent of all social relations and traditions; it has a social character by reason of the very fact that it follows methods of thought formed during millennia of co-operation between innumerable groups. And we, again, are able to take over these methods of thought only because we are members of society. Now, for exactly the same reasons, we cannot imagine religion as an isolated phenomenon. Even the mystic, who forgets his surroundings in awestruck joy as he experiences communion with his God, has not made his religion by his own efforts. The forms of thought which have led him to it are not his own individual creation; they belong to society. A Kaspar Hauser16 cannot evolve a religion without help from outside. Religion, like everything else, has grown up historically, and is subject to the constant change that affects every social phenomenon.
But religion is also a social factor in the sense that it regards social relations from a special angle and sets up rules for human conduct in society accordingly. It cannot refuse to state its principles in matters of social ethics. No religion which sets out to give its devotees an answer to the problems of life, and to console them where they most need consolation, can rest content with interpreting the relations of man to Nature, to becoming, and to passing away. If it leaves out the relations of man to man, it can produce no rules for earthly conduct but abandons the believer so soon as he starts thinking about the inadequacy of social conditions. Religion must provide him an answer when he asks why there are rich and poor, violence and justice, war and peace, or it will force him to look for an answer elsewhere. This would mean losing its hold on its adherents and its power over the spirit. Without social ethics religion would be dead.
Today the Islamic and Jewish religions are dead. They offer their adherents nothing more than a ritual. They know how to prescribe prayers and fasts, certain foods, circumcision and the rest; but that is all. They offer nothing to the mind. Completely despiritualized, all they teach and preach are legal forms and external rule. They lock their follower into a cage of traditional usages, in which he is often hardly able to breathe; but for his inner soul they have no message. They suppress the soul, instead of elevating and saving it. For many centuries in Islam, for nearly two thousand years in Jewry, there have been no new religious movements. Today the religion of the Jews is just as it was when the Talmud was drawn up. The religion of Islam has not changed since the days of the Arab conquests. Their literature, their philosophies continue to repeat the old ideas and do not penetrate beyond the circle of theology. One looks in vain among them for men and movements such as Western Christianity has produced in each century. They maintain their identity only by rejecting everything foreign and “different,” by traditionalism and conservatism. Only their hatred of everything foreign rouses them to great deeds from time to time. All new sects, even the new doctrines which arise with them, are nothing more than echoes of this fight against the foreign, the new, the infidel. Religion has no influence on the spiritual life of the individual, where indeed this is able to develop at all against the stifling pressure of rigid traditionalism. We see this most clearly in the lack of clerical influence. Respect for the clergy is purely superficial. In these religions there is nothing which could be compared to the profound influence which the clergy exercises in the Western Churches—though of a different order in each church; there is nothing to compare to the Jesuit, the Catholic bishop, and the Protestant pastor. There was the same inertia in the polytheistic religions of antiquity and there still is in the Eastern Church. The Greek Church has been dead for over a thousand years.17 Only in the second half of the nineteenth century did it once more produce a man in whom faith and hope flared up like fire. But Tolstoy’s Christianity, however much it may bear a superficially Eastern and Russian hue, is at bottom founded on Western ideas. It is particularly characteristic of this great Gospeller that, unlike the Italian merchant’s son, Francis of Assisi, or the German miner’s son, Martin Luther, he did not come from the people but from the nobility which, by upbringing and education, had been completely Westernized. The Russian Church proper has produced at most men like John of Kronstadt18 or Rasputin.
These dead churches lack any special ethics. Harnack says of the Greek Church:19 “The real sphere of the working life whose morality is to be regulated by the Faith, falls outside its direct observation. This is left to the state and the nation.” But it is otherwise in the living Church of the West. Here, where faith is not yet extinct, where it is not merely external form that conceals nothing but the priest’s meaningless ritual, where, in a word, it grips the whole man, there is continuous striving after a social ethic. Again and again do its members go back to the Gospels to renew their life in the Lord and His Message.
The Gospels as a Source of Christian Ethics
To the believer Holy Writ is the deposit of divine revelation, God’s word to humanity, which must forever be the unshakable foundation of all religion and all conduct controlled by it. This is true not only of the Protestant, who accepts the teaching of the pulpit only in so far as it can be reconciled with Holy Writ; it is true also of the Catholics who, on the one hand, derive the authority of Holy Writ from the Church, but, on the other, ascribe Holy Writ itself to divine origin by teaching that it came into being with the help of the Holy Ghost. The dualism here is resolved by entitling the Church alone to make what is the finally authentic—infallible—interpretation of Holy Writ. Both creeds assume the logical and systematic unity of the whole of the sacred writings; to bridge over the difficulties arising from this assumption must, therefore, be one of the most important tasks of ecclesiastical doctrine and science.
Scientific research regards the writings of the Old and New Testament as historical sources to be approached in the same manner as all other historical documents. It breaks up the unity of the Bible and tries to give each section its place in the history of literature. Now, modern biblical research of this order is incompatible with theology. The Catholic Church has recognized this fact but the Protestant Church still tries to delude itself. It is senseless to reconstruct the character of an historical Jesus in order to build up a doctrine of faith and morals on the results. Efforts of this kind hamper documentary research of a scientific kind by deflecting it from its real aim and assigning to it tasks which it cannot fulfill without introducing modern scales of value; moreover they are contradictory in themselves. On the one hand they try to explain Christ and the origin of Christianity historically; on the other, to regard these historical phenomena as the eternal source from which spring all the rules of ecclesiastical conduct, even in the totally different world of today. What is it but a contradiction to examine Christianity with the eye of a historian and then to seek a clue to the present in the results of the study. History can never present Christianity in its “pure form,” but only in its “original form.” To confuse the two is to shut one’s eyes to two thousand years of development.20 The error into which many Protestant theologians fall in this matter is the same as that committed by a section of the historical school of law when it attempted to impose the results of its researches into the history of jurisprudence upon present-day legislation and administration of justice. This is not the procedure of the true historian but rather of one who denies all evolution and all possibility of evolution. Contrasted with the absolutism of this point of view, the absolutism of the much condemned “shallow” eighteenth-century rationalists, who stressed precisely this element of progress and evolution, seems genuinely historical in its outlook.
The relation of Christian ethics to the problem of Socialism must not therefore be viewed through the eyes of Protestant theologians whose research is directed towards an unchangeable and immovable “essence” of Christianity. If one looks on Christianity as a living, and hence a constantly changing, phenomenon—a view not so incompatible with the outlook of the Catholic Church as one might at first imagine—then one must decline a priori to inquire whether Socialism or private property is more in keeping with its idea. The best we can do is to pass the history of Christianity in review and consider whether it has ever shown a bias in favour of this or that form of social organization. The attention we pay to the writings of the Old and New Testament in the process is justified by their importance even today as sources of ecclesiastical doctrine, but not by the supposition that from them alone can one glean what Christianity really is.
The ultimate aim of research of this kind should be to ascertain whether, both now and in the future, Christianity must necessarily reject an economy based on private property in the means of production. This question cannot be settled merely by establishing the fact, already familiar, that ever since its inception close on two thousand years ago Christianity has found its own ways of coming to terms with private property. For it might happen that either Christianity or “private property” should reach a point in its evolution Which renders the compatibility of the two impossible—supposing that it had ever existed.
Primitive Christianity and Society
Primitive Christianity was not ascetic. With a joyful acceptance of life it deliberately pushed into the background the ascetic ideals which permeated many contemporary sects. (Even John the Baptist lived as an ascetic.) Only in the third and fourth centuries was ascetisism introduced into Christianity, from this time dates the ascetic re-interpretation and reformation of Gospel teachings. The Christ of the Gospels enjoys life among his disciples, refreshes himself with food and drink and shares the feasts of the people. He is as far removed from asceticism and a desire to flee the world as he is from intemperance and debauchery.21 Alone his attitude to the relations of the sexes strikes us as ascetic, but we can explain this, as we can explain all practical Gospel Teachings—and they offer no rules of life except practical ones—by the basic conception which gives us our whole idea of Jesus, the conception of the Messiah.
“The Time is fulfilled, and the Kingdom of God is at hand: repent ye, and believe the gospel.” These are the words with which, in the Gospel of Mark, the Redeemer makes his entry.22 Jesus regards himself as the prophet of the approaching Kingdom of God, the Kingdom which according to ancient prophecy shall bring redemption from all earthly insufficiency, and with it from all economic cares. His followers have nothing to do but to prepare themselves for this Day. The time for worrying about earthly matters is past, for now, in expectation of the Kingdom, men must attend to more important things. Jesus offers no rules for earthly action and struggle; his Kingdom is not of this world. Such rules of conduct as he gives his followers are valid only for the short interval of time which has still to be lived while waiting for the great things to come. In the Kingdom of God there will be no economic cares. There the believers will eat and drink at the Lord’s table.23 For this Kingdom therefore, all economic and political counsel would be superfluous. Any preparations made by Jesus must be regarded as merely transitional expedients.24
It is only in this way that we can understand why, in the Sermon on the Mount, Jesus recommends his own people to take no thought for food, drink, and clothing; why he exhorts them not to sow or reap or gather in barns, not to labour or spin. It is the only explanation, too, of his and his disciples’ “communism.” This “communism” is not Socialism; it is not production with means of production belonging to the community. It is nothing more than a distribution of consumption goods among the members of the community—”unto each, according as any one had need.”25 It is a communism of consumption goods, not of the means of production, a community of consumers, not of producers. The primitive Christians do not produce, labour, or gather anything at all. The newly converted realize their possessions and divide the proceeds with the brethren and sisters. Such a way of living is untenable in the long run. It can be looked upon only as a temporary order which is what it was in fact intended to be. Christ’s disciples lived in daily expectation of Salvation.
The primitive Christian’s idea of imminent fulfillment transforms itself gradually into that conception of the Last Judgment which lies at the root of all ecclesiastical movements that have had any prolonged existence. Hand in hand with this transformation went the entire reconstruction of the Christian rules of life. Expectation of the coming of the Kingdom of God could no longer serve as a basis. When the congregations sought to organize themselves for a prolonged life on earth they had to cease demanding that their members should abstain from work and dedicate themselves to the contemplative life in preparation for the Divine Kingdom. Not only did they have to tolerate their brethren’s participation in the world’s work, they had to insist upon it, as otherwise they would have destroyed the conditions necessary to the existence of their religion. And thus, Christianity, which began with complete indifference to all social conditions, practically canonized the social order of the declining Roman Empire once the process of adapting the Church to that order had begun.
It is an error to speak of the social teachings of primitive Christianity. The historical Christ and his teachings, as the oldest part of the New Testament represents them, are quite indifferent to all social considerations. Not that Christ did not sharply criticize the existing state of affairs, but he did not think it worth while to consider how matters could be improved or even to think about them at all. That was God’s affair. He would set up his own glorious and faultless Kingdom, and its coming would be soon. Nobody knew what this Kingdom would look like, but one thing was certain: in it one would live carefree. Jesus omits all minuter details, and they were not needed; for the Jews of his time did not doubt the splendour of life in the Kingdom of God. The Prophets had announced this Kingdom and their words continued to live in the minds of the people, forming indeed the essential content of their religious thought.
The expectation of God’s own reorganization when the time came and the exclusive transfer of all action and thought to the future Kingdom of God, made Jesus’s teaching utterly negative. He rejects everything that exists without offering anything to replace it. He arrives at dissolving all existing social ties. The disciple shall not merely be indifferent to supporting himself, shall not merely refrain from work and dispossess himself of all goods, but he shall hate “father, and mother, and wife, and children, and brethren, and sisters, yea, and his own life.”26 Jesus is able to tolerate the worldly laws of the Roman Empire and the prescriptions of the Jewish Law because he is indifferent to them, despising them as things important only within the narrow limits of time and not because he acknowledges their value. His zeal in destroying social ties knows no limits. The motive force behind the purity and power of this complete negation is ecstatic inspiration and enthusiastic hope of a new world. Hence his passionate attack upon everything that exists. Everything may be destroyed because God in His omnipotence will rebuild the future order. No need to scrutinize whether anything can be carried over from the old to the new order, because this new order will arise without human aid. It demands therefore from its adherents no system of ethics, no particular conduct in any positive direction. Faith and faith alone, hope, expectation—that is all he needs. He need contribute nothing to the reconstruction of the future, this God Himself has provided for. The clearest modern parallel to the attitude of complete negation of primitive Christianity is Bolshevism. The Bolshevists, too, wish to destroy everything that exists because they regard it as hopelessly bad. But they have in mind ideas, indefinite and contradictory though they may be, of the future social order. They demand not only that their followers shall destroy all that is, but also that they pursue a definite line of conduct leading towards the future Kingdom of which they have dreamt. Jesus teaching in this respect, on the other hand, is merely negation.27
Jesus was no social reformer. His teachings had no moral application to life on earth, and his instructions to the disciples only have a meaning in the light of their immediate aim—to await the Lord with girded loins and burning lamps, “that when he cometh and knocketh, they may straightaway open unto him.”28 It is just this that has enabled Christianity to make its triumphant progress through the world. Being neutral to any social system, it was able to traverse the centuries without being destroyed by the tremendous social revolutions which took place. Only for this reason could it become the religion of Roman Emperors and Anglo-Saxon entrepreneurs, of African negroes and European Teutons, medieval feudal lords and modern industrial labourers. Each epoch and every party has been able to take from it what they wanted, because it contains nothing which binds it to a definite social order.
The Canon Law Prohibition of Interest
Each epoch has found in the Gospels what it sought to find there, and has overlooked what it wished to overlook. This is best proved by reference to the preponderant importance which ecclesiastical social ethics for many centuries attached to the doctrine of usury.29 The demand made upon Christ’s disciples in the Gospels and other writings of the New Testament is something very different from the renunciation of interest on capital lent out. The canonic prohibition of interest is a product of the medieval doctrine of society and trade, and had originally nothing to do with Christianity and its teachings. Moral condemnation of usury and the prohibition of interest preceded Christianity. They were taken over from the writers and the legislators of antiquity and enlarged as the struggle between agriculturists and the rising merchants and tradesmen developed. Only then did the people try to support them with quotations from Holy Writ. The taking of interest was not opposed because Christianity required it, but rather, because the public condemned it, people tried to read into the Christian writings a condemnation of usury. For this purpose the New Testament seemed at first to be useless, and accordingly the Old Testament was drawn on. For centuries no one thought of quoting any passage from the New Testament in support of the prohibition. It was some time before the scholastic art of interpretation succeeded in reading what it sought into that much quoted passage from Luke, and so finding support in the Gospels from the suppression of usury.30 This was not until the beginning of the twelfth century. Only after the decree of Urban III is that passage quoted as proof of the prohibition.31 The construction then put on Luke’s words was, however, quite untenable. The passage is certainly not concerned with the taking of interest. It is possible that in the context of that passage Μηδὲν ὰπελπίξοντεζ may mean “do not count on the restitution of what is lent.” Or more probably: “you shall lend not only to the well-to-do, who can also lend to you at some time, but also to him from whom there is no prospect of this, to the poor.”32
The great importance people attached to this passage contrasts sharply with their disregard of other Gospel commands and prohibitions. The medieval Church was intent on carrying the order against usury to its logical conclusion, but it wilfully omitted to enforce many clear and unambiguous commands of the Gospels with a fraction of the energy devoted to stamping out this particular practice. In the very same chapter of Luke other things are ordained or forbidden in precise words. The Church has never, for example, been seriously at pains to forbid a man who has been robbed from demanding back his own, nor has it deprecated resistance to the robber, nor tried to brand an act of judgment as an unchristian act. Other injunctions of the Sermon on the Mount, such as indifference to food and drink, have similarly never been whole-heartedly enforced.33
Christianity and Property
Since the third century Christianity has always served simultaneously those who supported the social order and those who wished to overthrow it. Both parties have taken the same false step of appealing to the Gospels and have found Biblical passages to support them. It is the same today: Christianity fights both for and against Socialism.
But all efforts to find support for the institution of private property generally, and for private ownership in the means of production in particular, in the teachings of Christ are quite vain. No art of interpretation can find a single passage in the New Testament that could be read as upholding private property. Those who look for a Biblical ukase must go back to the Old Testament, or content themselves with disputing the assertion that communism prevailed in the congregation of the early Christians.34 No one has ever denied that the Jewish community was familiar with private property, but this brings us no further towards defining the attitude towards it of primitive Christianity. There is as little proof that Jesus approved the economic and political ideas of the Jewish Law as that he did not. Christ does say, indeed, that he has not come to destroy the Law but to fulfil it.35 But this we should try to understand from the standpoint which alone makes Jesus’ work intelligible. The words can hardly refer to the rules of the Mosaic Law, made for earthly life before the coming of the Kingdom of God, since several of his commands are in sharp contrast to that Law. We may admit that the reference to the “communism” of the first Christians proves nothing in favour of “the collectivist communism according to modern notions,”36 and yet not deduce from this that Christ approved of property.37
One thing of course is clear, and no skilful interpretation can obscure it. Jesus’ words are full of resentment against the rich, and the Apostles are no meeker in this respect. The Rich Man is condemned because he is rich, the Beggar praised because he is poor. The only reason why Jesus does not declare war against the rich and preach revenge on them is that God has said: “Revenge is mine.” In God’s Kingdom the poor shall be rich, but the rich shall be made to suffer. Later revisers have tried to soften the words of Christ against the rich, of which the most complete and powerful version is found in the Gospel of Luke, but there is quite enough left to support those who incite the world to hatred of the rich, revenge, murder and arson. Up to the time of modern Socialism no movement against private poverty which has arisen in the Christian world has failed to seek authority in Jesus, the Apostles, and the Christian Fathers, not to mention those who, like Tolstoy, made the Gospel resentment against the rich the very heart and soul of their teaching. This is a case in which the Redeemer’s words bore evil seed. More harm has been done, and more blood shed, on account of them than by the persecution of heretics and the burning of witches. They have always rendered the Church defenseless against all movements which aim at destroying human society. The Church as an organization has certainly always stood on the side of those who tried to ward off communistic attack. But it could not achieve much in this struggle. For it was continually disarmed by the words: “Blessed be ye poor: for yours is the Kingdom of God.”
Nothing, therefore, is less tenable than the constantly repeated assertion that religion, that is, the confession of the Christian Faith, forms a defence against doctrines inimical to property, and that it makes the masses unreceptive to the poison of social incitement. Every church which grows up in a society built on private property must somehow come to terms with private property. But considering the attitude of Jesus to questions of social life, no Christian Church can ever make anything more than a compromise here, a compromise which is effective only as long as nobody insists on a literal interpretation of the words of the Scriptures. It would be foolish to maintain that Enlightenment, by undermining the religious feeling of the masses, had cleared the way for Socialism. On the contrary, it is the resistance which the Church has offered to the spread of liberal ideas which has prepared the soil for the destructive resentment of modern socialist thought. Not only has the Church done nothing to extinguish the fire, it has even blown upon the embers. Christian Socialism grew up in the Catholic and Protestant countries, while the Russian Church witnessed the birth of Tolstoy’s teachings, which are unequalled in the bitterness of their antagonism to society. True, the official Church tried at first to resist these movements, but it had to submit in the end, just because it was defenseless against the words of the Scriptures.
The Gospels are not socialistic and not communistic. They are, as we have seen, indifferent to all social questions on the one hand, full of resentment against all property and against all owners on the other. So it is that Christian doctrine, once separated from the context in which Christ preached it—expectation of the imminent Kingdom of God—can be extremely destructive. Never and nowhere can a system of social ethics embracing social co-operation be built up on a doctrine which prohibits any concern for sustenance and work, while it expresses fierce resentment against the rich, preaches hatred of the family, and advocates voluntary castration.
The cultural achievements of the Church in its centuries of development are the work of the Church, not of Christianity. It is an open question how much of this work is due to the civilization inherited from the Roman state and how much to the idea of Christian love completely transformed under the influence of the Stoics and other ancient philosophers. The social ethics of Jesus have no part in this cultural development. The Church’s achievement in this case was to render them harmless, but always only for a limited period of time. Since the Church is obliged to maintain the Gospels as its foundation, it must always be prepared for a revolt on the part of those among its members who put on Christ’s words an interpretation different from that ordained by the Church.
Social ethics applicable to earthly life can never be derived from the words of the Gospels. It matters little whether they are a true and just report of what, as a matter of history, Jesus taught. For to every Christian Church these, together with the other books of the New Testament, must represent the foundation without which its essential character is destroyed. Even should historical research show, with a high degree of probability, that the historical Jesus thought and spoke about human society otherwise than he is made to do in the New Testament, its doctrines would still remain unaltered for the Church. For the Church, that which is written in the New Testament must forever remain the Word of God. Here, apparently, only two things are possible. Either the Church may renounce, in the manner of the Eastern Church, the responsibility of taking up any attitude to the problems of social ethics, at which point it ceases to be a moral force and limits itself to purely decorative action in life. Or it may follow the other path taken by the Western Church, which has always incorporated in its teachings those social ethics which best served its interests at the moment and its position in state and society. It has allied itself with the feudal lords against the serfs, it has supported the slave-economy of American plantations, but it has also—in the case of Protestantism and especially in Calvinism—made the morals of the rising Rationalism its own. It has promoted the struggle of the Irish tenants against the English aristocrats, it has fought with the Catholic trade unions against the entrepreneurs, and with the conservative governments against social democracy. And in each case it has been able to justify its attitude by quotations from the Bible. This too amounts in fact to an abdication by Christianity in the field of social ethics, for the Church becomes thus a volitionless tool in the hands of time and fashion. But what is worse: it attempts to base each phase of partisanship on the teaching of the Gospels and in this way encourages every movement to seek scriptural justification for its ends. Considering the character of the scriptural passages so exploited, it is clear that the more destructive doctrines are bound to win.
But even if it is hopeless to try to build up an independent Christian social ethic on the Gospels, might it not be possible to bring Christian doctrines into harmony with a social ethic that promotes social life instead of destroying it, and thus to utilize the great forces of Christianity in the service of Civilization? Such a transformation would not be unprecedented in history. The Church is now reconciled to the fact that modern research has exploded the fallacies of the Old and New Testaments with regard to natural science. It no longer burns at the stake heretics who maintain that the world moves in space, or institutes inquisitional proceedings against the man who dares to doubt the raising of Lazarus and the bodily resurrection of the dead. Even priests of the Church of Rome are today permitted to study astronomy and the history of evolution. Might not the same be possible then in sociology? Might not the Church reconcile itself with the social principle of free cooperation by the division of labour? Might not the very principle of Christian love be interpreted to this end?
These are questions which interest not only the Church. The fate of Civilization is involved. For it is not as if the resistance of the Church to liberal ideas was harmless. The Church is such a tremendous power that its enmity to the forces which bring society into existence would be enough to break our whole culture into fragments. In the last decades we have witnessed with horror its terrible transformation into an enemy of society. For the Church, Catholic as well as Protestant, is not the least of the factors responsible for the prevalence of destructive ideals in the world today; Christian Socialism has done hardly less than atheist socialism to bring about the present state of confusion.
Historically it is easy to understand the dislike which the Church has shown for economic liberty and political Liberalism in any form. Liberalism is the flower of that rational enlightenment which dealt a death blow to the regime of the old Church and from which modern historical criticism has sprung. It was Liberalism that undermined the power of the classes that had for centuries been closely bound up with the Church. It transformed the world more than Christianity had ever done. It restored humanity to the world and to life. It awakened forces which shook the foundations of the inert traditionalism on which Church and creed rested. The new outlook caused the Church great uneasiness, and it has not yet adjusted itself to even the externals of the modern epoch. True, the priests in Catholic countries sprinkle holy water on newly laid railways and dynamos of new power stations, but the professed Christian still shudders inwardly at the workings of a civilization which his faith cannot grasp. The Church strongly resented modernity and the modern spirit. What wonder, then, that it allied itself with those whom resentment had driven to wish for the break-up of this wonderful new world, and feverishly explored its well-stocked arsenal for the means to denounce the earthly struggle for work and wealth. The religion which called itself the religion of love became a religion of hatred in a world that seemed ripe for happiness. Any would-be destroyers of the modern social order could count on finding a champion in Christianity.
It is tragic that it should have been just the greatest minds of the Church, those who realized the significance of Christian love and acted on it, who took part in this work of destruction. Priests and monks who practiced true Christian charity, ministered and taught in hospitals and prisons and knew all there was to know about suffering and sinning humanity—these were the first to be ensnared by the new gospel of social destruction. Only a firm grasp of liberal philosophy could have innoculated them against the infectious resentment which raged among their protégés and was justified by the Gospels. As it was, they became dangerous enemies of society. From the work of charity sprang hatred of society.
Some of these emotional opponents of the liberal economic orders stopped short at open opposition. Many, however, became socialists—not, of course, atheistical socialists like the proletarian social-democrats, but Christian Socialists. And Christian Socialism is none the less Socialism.
It was no less a mistake for Socialism to seek a parallel with itself in the early centuries of the Christian Era as in the first congregation. Even the “consumers communism” of that early congregation vanished when expectation of the coming of the Kingdom began to recede into the background. Socialist methods of production did not, however, replace it in the community. What the Christians produced, was produced by the individual within his own farm or shop. The revenues which provided for the needy and met the cost of joint activities came from contributions, voluntary or compulsory, of members of the congregation, who produced on their own account with their own means of production. A few isolated instances of socialist production may have occurred in the Christian congregations of the first centuries, but there is no documentary evidence of it. There was never a teacher of Christianity, whose teachings and writings are known to us, who recommended it. We often find the Apostolic Fathers and the Fathers of the Church, exhorting their followers to return to the communism of the first congregation, but this is always a communism of consumption. They never recommend the socialistic organization of production.38
The best known of these exhortations in praise of communism is that of John Chrysostom. In the eleventh of his homilies to the Acts of the Apostles the Saint applauds the consumers’ communism of the first Christian congregation, and with all his fiery eloquence advocates its revival. Not only does he recommend this form of communism by reference to the example of the Apostles and their contemporaries, but tries to set forth rationally the advantages of communism as he conceives it. If all the Christians of Constantinople were to hand over their possessions to a common ownership, then so much would be amassed that all the Christian poor could be fed and no one would suffer want, for the costs of joint living are far smaller than those of single households. Here St. Chrysostom adduces arguments similar to those brought forward today by people who advocate one-kitchen houses or communal kitchens and try to prove arithmetically the economies which a concentration of cooking and housekeeping would achieve. The costs, says this Father of the Church, would not be large, and the enormous fund which would be amassed by uniting the goods of individuals would be inexhaustible, especially as God’s blessings would then be poured yet more lavishly on the faithful. Moreover, every newcomer would have to add something to the general fund.39 These sober, matter of fact expositions show us that what Chrysostom had in mind was merely joint consumption. His comments on the economic advantages of unification, culminating in the statement that division into fragments leads to diminution, while unity and co-operation lead to increase, of well-being, do credit to their author’s economic perception. On the whole, however, his proposals reveal a complete lack of understanding of the problem of production. His thoughts are directed exclusively to consumption. That production comes before consumption had never occurred to him. All goods were to be transferred to the community (St. Chrysostom presumably thinks here of their sale, following the example of the Gospels and the Acts of the Apostles) after which the community was to begin consuming in common. He had not realized that this could not go on for ever. He believed that the millions which would be gathered together—he estimates the treasure at between one and three million pounds weight of gold—-could never be used up. One notices that the saint’s economic insight ends just where the wisdom of our social politicians also tends to end, when they try to reorganize the whole national economy in the light of experience gained in charitable work in the field of consumption.
St. Chrysostom explains that people fear to risk the change to the communism, which he recommends, more than a plunge into the ocean. And so the Church, too, soon dropped the communistic idea.
For monastic economy cannot be regarded as Socialism. Monasteries which could not subsist on private donations usually lived on the tithes and dues of rent-paying peasants and the yields of farms and other property. Very occasionally the monks themselves worked, on a sort of producers’ cooperative basis. The whole monastic existence is an ideal of life accessible only to the few, and monastic production can never be taken as a standard for the whole commonwealth. Socialism, on the other hand, is a general economic system.
The roots of Christian Socialism are found neither in the primitive nor in the medieval Church. It was the Christianity that emerged revitalized from the tremendous struggles of faith in the sixteenth century which first adopted it, though only gradually and in the face of strong opposition.
The modern Church differs from the medieval Church in that it has continually to fight for its existence. The medieval Church ruled unchallenged; all that men thought, taught, or wrote emanated from it and eventually returned to it. The spiritual inheritance of classic antiquity could not shake its dominion, for its ultimate meaning was beyond the understanding of a generation cramped by feudal concepts and ideas. But in proportion as social evolution progressed in the direction of rational thought and action, men’s efforts to shake off the fetters of traditional thought in respect of ultimate truths became more successful. The Renaissance strikes at the root of Christianity. Based on classical reasoning and classical art, its influence inevitably tended to lead away from the Church or at best to leave it out of account. Far from trying to stem the tide, churchmen became the most zealous protagonists of the new spirit. At the beginning of the sixteenth century no one was further removed from Christianity than the Church itself. The last hour of the old faith seemed to have sounded.
Then came the great revulsion, the Christian counter-revolution. It did not come from above, from the princes of the Church or from the monasteries, in fact it did not come from the Church at all. It was forced upon the Church from outside, springing from the depths of the people where Christianity still survived as an inner force. The assault on the moribund Church with a view to its reformation came thus from outside and below. The Reformation and the Counter-reformation are the two great expressions of this ecclesiastical rebirth. They differ in origin and in method, in their forms of worship and prescribed doctrines, above all in their presuppositions and achievements in political affairs; but they are at one in their ultimate aim: to base the world order once more on the Gospels, to reinstate faith as a power controlling the minds and hearts of men. It is the greatest revolt of faith against thought, of tradition against philosophy known to history. Its successes were enormous, and it created Christianity as we know it today, the religion that has its seat in the heart of the individual, which controls conscience and comforts the soul. But complete victory has been denied it. Though it warded off defeat—the fall of Christianity—it could not destroy the enemy. For ever since the sixteenth century this struggle of ideas has been pursued almost without intermission.
The Church knows that it cannot win unless it can seal the fount from which its opponent continues to draw inspiration. As long as rationalism and the spiritual freedom of the individual are maintained in economic life, the Church will never succeed in fettering thought and shepherding the intellect in the desired direction. To do this it would first have to obtain supremacy over all human activity. Therefore it cannot rest content to live as a free Church in a free state; it must seek to dominate that state. The Papacy of Rome and the Protestant national churches both fight for such dominion as would enable them to order all things temporal according to their ideals. The Church can tolerate no other spiritual power. Every independent spiritual power is a menace to it, a menace which increases in strength as the rationalization of life progresses.
Now independent production does not tolerate any spiritual over-lordship. In our day, dominion over the mind can only be obtained through the control of production. All Churches have long been dimly aware of this, but it was first made clear to them when the socialist idea, rising from an independent source, made itself felt as a powerful and rapidly growing force. It then dawned upon the Churches that theocracy is only possible in a socialist community.
On one occasion this idea was actually realized. This was when the Society of Jesus created that remarkable state in Paraguay, which was not unlike an embodiment of the ideal Republic of Plato. This unique state flourished for more than a century, when it was destroyed by external forces. It is certain that the Jesuits did not found this society with the idea of making a social experiment or of setting up an example for other communities of the world. But ultimately they were aiming in Paraguay at no more than what they have everywhere tried to achieve, but without success, on account of the great resistance encountered. They have tried to bring laymen—as children needing the guardianship of the Church—under the beneficial government of the Church and of their own Order. Neither the Jesuit order nor any other ecclesiastical body has since tried anything like the Paraguayan experiment. But it is plain that all Western Churches, as well as the Roman Catholic Church, are aiming at the same goal. Remove all the obstacles which hamper the Church to-day, and nothing will prevent it from repeating the Paraguayan achievement everywhere.
That the Church, generally speaking, takes up a negative attitude to socialist ideas does not disprove the truth of these arguments. It opposes any Socialism which is to be effected on any other basis than its own. It is against Socialism as conceived by atheists, for this would strike at its very roots; but it has no hesitation in approaching socialist ideals provided this menace is resumed. The Prussian Church stands at the head of Prussian State Socialism and the Roman Catholic Church everywhere pursues its special Christian social ideal.
In face of all this evidence, it would seem that only a negative answer can be made to the question asked above: whether it might not be possible to reconcile Christianity with a free social order based on private ownership in the means of production. A living Christianity cannot, it seems, exist side by side with Capitalism. Just as in the case of Eastern religions, Christianity must either overcome Capitalism or go under. Yet, in the fight against Capitalism today, there is no more effective war-cry than Socialism, now that suggestions of a return to the medieval social order find few supporters.
But there may be an alternative. No one can foresee with certainty how Church and Christianity may change in the future. Papacy and Catholicism now face problems incomparably more difficult than all those they have had to solve for over a thousand years. The world-wide Universal Church is threatened in its very being by Chauvinist nationalism. By refinement of political art it has succeeded in maintaining the principle of Catholicism through all the turmoil of national wars, but it must realize more clearly every day that its continuance is incompatible with nationalist ideas. Unless it is prepared to succumb, and make way for national churches, it must drive out nationalism by an ideology which makes it possible for nations to live and work together in peace. But in so doing the Church would find itself inevitably committed to Liberalism. No other doctrine would serve.
Ethical Socialism, Especially That of the New Criticism
The Categorical Imperative as a Foundation for Socialism
Engels called the German Labour Movement the heir to the German classical philosophy.41 It would be more correct to say that German (not only Marxian) Socialism represents the decadence of the school of idealist philosophy. Socialism owes the dominion it won over the German mind to the idea of society as conceived by the great German thinkers. Out of Kant’s mysticism of duty and Hegel’s deification of the State it is easy to trace the development of socialist thought; Fichte is already a socialist.
In recent decades the revival of Kantian criticism, that much praised achievement of German philosophy, has benefited Socialism also. The Neo-Kantians, especially Friedrich Albert Lange and Hermann Cohen, have declared themselves socialists. Simultaneously Marxians have tried to reconcile Marxism with the New Criticism. Ever since the philosophical foundations of Marxism have shown signs of cracking, attempts to find in critical philosophy support for socialist ideas have multiplied.
The weakest part of Kant’s system is his ethics. Although they are vitalized by his mighty intellect, the grandeur of individual concepts does not blind us to the fact that his starting-point is unfortunately chosen and his fundamental conception a mistaken one. His desperate attempt to uproot Eudaemonism has failed. In ethics, Bentham, Mill, and Feuerbach triumph over Kant. The social philosophy of his contemporaries, Ferguson and Adam Smith, left him untouched. Economics remained foreign to him. All his perception of social problems suffers from these deficiencies.
In this respect, Neo-Kantians have made no better progress than their master. They, too, lack insight into the fundamental social law of the division of labour. They only see that the distribution of income does not correspond to their ideal, that the largest incomes do not go to those whom they consider the most deserving, but to a class they despise. They see people poor and in want, but do not try to discover whether this is due to the institution of private property or to attempts to restrict it. And they promptly condemn the institution of private ownership itself, for which they—living far away from the troubles of business—never had any sympathies. In social cognition they remain bound to the external and symptomatic. They tackle all other problems without a qualm, but here timidity restrains them. In their embarrassment, they betray their underlying bias. In social philosophy it is often difficult for thinkers who are otherwise quite open-minded to avoid all resentment. Into their thoughts obtrudes the recollection of those more prosperous than themselves; they make comparisons between their own value and the lack of it in others on the one hand, and their own poverty and the wealth of others on the other. In the end anger and envy, rather than reason, guide their pen.
This alone explains why such lucid thinkers as the Neo-Kantians have not yet clearly thought out the only salient problems in social philosophy. Not even the rudiments of a comprehensive social philosophy are to be found in their works. They make numerous unfounded criticisms of certain social conditions, but omit to discuss the most important systems of sociology. They judge, without having first made themselves familiar with the results of economic science.
The starting-point of their Socialism is generally the sentence: “Act in such a way that you use your being, equally with the being of anyone else, always as a purpose, never merely as a means.” In these words, says Cohen, “the most profound and powerful meaning of the categoric imperative is expressed; they contain the moral programme of the modern age and of all future world history.”42 And from that to Socialism, he seems to infer, is no great distance. “The idea of the purpose preference of humanity becomes transformed into the idea of Socialism by the definition of every individual as ultimate purpose, an end in himself.”43
It is evident that this ethical argument for Socialism stands or falls by the assertion that in the economic order based on private ownership in the means of production all men, or some men, are means and not purpose. Cohen considers this to be completely proved. He believes that in such a social order two classes of men exist, owners and non-owners, of whom only the first lead an existence worthy of a human being, while the second merely serve. It is easy to see where this notion comes from. It rests on popular ideas on the relations of rich and poor, and is supported by the Marxian social philosophy, for which Cohen professes great sympathy without, however, making his views about it clear.44 Cohen completely ignores the liberal social theory. He takes it for granted that this is untenable, and thinks that it would be a waste of time to criticize it. Yet only by refuting the liberal views of the nature of society and the function of private property could he justify the assertion that in a society based on private ownership in the means of production men serve as means, not as ends. For liberal social theory proves that each single man sees in all others, first of all, only means to the realization of his purposes, while he himself is to all others a means to the realization of their purposes; that finally, by this reciprocal action, in which each is simultaneously means and end, the highest aim of social life is attained—the achievement of a better existence for everyone. As society is only possible if everyone, while living his own life, at the same time helps others to live, if every individual is simultaneously means and end; if each individual’s well-being is simultaneously the condition necessary to the well-being of the others, it is evident that the contrast between I and thou, means and end, automatically is overcome. This, after all, is just what the simile of the biological organism is supposed to make us perceive. In the organic structure no parts are to be regarded only as means and none only as ends. According to Kant the organism is a being “in which everything is end and reciprocally also means.”45 Now Kant was thoroughly familiar with the nature of the organic, but he did not see—and in this he lagged far behind the great sociologists who were his contemporaries—that human society is formed according to the same principle.
The teleological view, which differentiates means and end, is permissible only in so far as we make the will and action of individual men or individual human associations the subject of investigation. It ceases to have any meaning as soon as we go further and look at the effects of this action in society. For every individual who acts there exists an ultimate purpose, the purpose which Eudaemonism enables us to understand; in this sense one may say that every man is an end to himself and an end in himself. But as an observation applied to the whole of society, this mode of expression is without any cognitive value. Here we cannot speak of purpose with more justification than of any other phenomenon of nature. When we ask whether, in society, this or that is end or means, we mentally substitute for society—that is, for the structure of human co-operation held together by the superiority of the division of labour over isolated labour—a structure welded together by one will, and then ask what is the aim of this will. This is animistic thought, it is not in any way sociological or scientific.
Cohen’s special argument for the abolition of private property reveals the obscurity in which he still labours with regard to this fundamental problem of social life. Things, he says, have value. Persons, however, have no value. They have dignity. The market price of the value of labour is incompatible with the dignity of the person.46 This leads us into the abyss of Marxian phraseology and the doctrine of the “commodity-character” of labour and its objectionableness. This is the phrase which found its way into the treaties of Versailles and St. Germain in the form of a demand for the acceptance of the basic principle; “that labour should not be regarded merely as an article of commerce.”47 Enough, however, of these scholastic trivialities.
After this we need not be surprised to find repeated in Cohen all those catchwords which for thousands of years have been brought to bear against the institution of private property. He rejects property because the owner, by getting control over an isolated action, becomes in fact the owner of the person.48 He rejects property because it withdraws from the worker the produce of his labour.49
Clearly the argument for Socialism presented by the Kantian school always leads us back to the economic concepts of the various socialistic writers; above all to Marx and the “academic” socialists who followed in his steps. They have no arguments other than economic and sociological arguments, and these prove to be untenable.
The Duty of Work as a Foundation for Socialism
“If any would not work, neither should he eat,” says the Second Epistle of the Thessalonians, which was ascribed to the Apostle Paul.50 This admonition to work is directed to those who want to live on their Christianity at the expense of the working members of the congregation; they are to support themselves without burdening their fellows.51 Torn out of its context, this has long been interpreted as a rejection of unearned income.52 It contains a most succinctly expressed moral precept which is continually being advocated with great vigour.
The train of thought which has led people to this principle can be followed in a saying of Kant: “Man may be as ingenious as he will, yet he cannot force Nature to accept other laws. Either he must work himself or others for him, and his labour will rob others of as much of their happiness as he needs to increase his own above the mean.”53
It is important to note that Kant cannot base the indirect rejection of private property which lies in these words otherwise than on a utilitarian or eudaemonistic view. The conception from which he proceeds is that through private property more work is laid on some, while others are allowed to idle. This criticism is not proof against the objection that private ownership and the differences in the amount of property do not take anything from anyone, that, rather, in a social order where neither were permitted so much less would be produced, that the per capita quota of the product of labour would amount to less than what the propertyless worker receives as income in a social order based on private property. It collapses as soon as one disproves the statement that the leisure of the possessors is bought by the extra efforts of those without possessions. Such ethical judgments against private property also show clearly that all moral evaluation of economic functions rests ultimately on a view of their economic achievements—on that and nothing else. To reject on “moral grounds” only an institution not considered objectionable from the utilitarian standpoint is, if we look more closely, not the aim of ethical considerations. Actually, in all such cases the only difference of opinion is a difference of opinion about the economic function of such institutions.
That this fact has been overlooked is because those who tried to refute ethical criticism of private property have used the wrong arguments. Instead of pointing out its social significance they have usually been content to demonstrate the right of ownership or to prove that the owner, too, is not inactive, since he has worked to acquire his property and works to maintain it, and other arguments of this nature. The unsoundness of all this is obvious. It is absurd to refer to existing law when the problem is what the law should be; to refer to work which the owner does or has done when the problem is, not whether a certain kind of work should or should not be paid for, but whether private property in the means of production is to exist at all, and, if it exists, whether inequality of such ownership can be tolerated.
Therefore, from the ethical point of view, one is not permitted to ask whether a certain price is justified or not. Ethical judgment has to choose between a social order resting on private ownership in the means of production and one based on common ownership. Once it has arrived at this decision—which, for eudaemonistic ethics, can be based only upon an opinion of what each of the two imagined forms of society would achieve—it cannot proceed to call immoral single consequences of the order it has selected. That which is necessary to the social order it has chosen is moral, and everything else is immoral.
The Equality of Incomes as an Ethical Postulate
Against the assertion that all men should have equal incomes, as little can be said scientifically as can be said in support of it. Here is an ethical postulate which can only be evaluated subjectively. All science can do is to show what this aim would cost us, what other aims we should have to forgo in striving to attain this one.
Most people who demand the greatest possible equality of incomes do not realize that what they desire would only be achieved by sacrificing other aims. They imagine that the sum of incomes will remain unchanged and that all they need to do is to distribute it more equally than it is distributed in the social order based on private property. The rich will give as much as they receive over and above the average, and the poor receive as much as is needed to make up their incomes to the average. But the average income itself will remain unchanged. It must be clearly understood, however, that this idea rests on a grave error. It has been shown that, in whatever way one envisages the equalization of incomes this must always and necessarily lead to a very considerable reduction of the total national income and, thus, also, of the average income. On this showing, the matter takes on quite a different complexion. For we have then to decide whether we are in favor of an equal distribution of income at a lower average income, or inequality of incomes at a higher average income.
The decision will depend, of course, essentially, on how high one estimates the reduction which alteration in the social distribution of income will cause. If we conclude that the average income will be lower than that received today by the poorest, our attitude will probably be quite different from the attitude of most socialists of the sentimental type. If we accept what has been said in the second part of the book about how low productivity under Socialism and especially the contention that economic calculation would be quite impossible, then this argument of ethical Socialism also collapses.
It is untrue that some are poor because others are rich.54 If an order of society in which incomes were equal replaced the capitalist order, everyone would become poorer. Paradoxical though it may sound, the poor receive what they do because rich people exist.
And if we reject the argument for the general conscription of labour and for equality of wealth and incomes which is based on the statement that some have their leisure and fortune at the expense of the increased labour and poverty of others, then there remains no basis for these ethical postulates except resentment. No one shall be idle if I have to work; no one shall be rich if I am poor. Thus we see, again and again, that resentment lies behind all socialist ideas.
The Ethical-Aesthetic Condemnation of the Profit-Motive
Another reproach which philosophers level against the capitalist economic order is that it encourages rank over-development of the acquisitive instinct. Man, they say, is no longer lord of the economic process, but its slave. That economic activity exists merely to satisfy wants and is a means, not an end in itself, has been forgotten. Life wears itself out in the perpetual hurry and scurry to get rich, and men have no time left for inner composure and real enjoyment. They lay waste their best powers in the exhausting daily struggle of free competition. And the ideologists look back into a distant past, where all is romantically transfigured. They see the Roman patrician at his country seat, meditating peacefully on the problems of the stoa, the medieval monk dividing his hours between devotion and the classics; the prince of the Renaissance at whose court artists and scholars meet, the Rococo lady in whose salon the encyclopedists develop their ideas—marvellous pictures, these, which produce in us a deep longing for the past. And our loathing for the present deepens when we turn from these visions to the life led by those who lack culture in our own time.
The weakness of this argument, which appeals to the feelings rather than to the mind, is not only that it contrasts the brightest flowers of all times and peoples with the weeds of modern life. It is clear that one cannot compare the life of a Pericles or Maecenas with the life of the ordinary man in the street. But it is still quite untrue that the haste of modern business life has killed man’s sense of the beautiful and the sublime. The wealth of the “bourgeois” civilization is not spent on base enjoyments alone. If argument be necessary, one need only point to the way in which serious music has become popular in the last decades, particularly among that class of the population which is caught in the whirl of business life. There never has been a time when art was closer to the heart of large circles of the people. It is no phenomenon peculiar to our time that coarse and vulgar amusements appeal more to the great mass of the people than nobler forms of enjoyment. It was always so. And we may take it that in the socialist community good taste will not always predominate.
Modern man has always before his eyes the possibility of growing rich by work and enterprise. In the more rigid economy of the past this was less easy. People were rich or poor from birth, and remained so through their lives unless they were given a change of position through some unforeseen accident, which their own work or enterprise could not have caused or avoided. Accordingly, we had the rich walking on the heights and the poor who stayed in the depths. It is not so in capitalistic society. The rich can more easily become poor and the poor can more easily become rich. And because every individual is not born with, as it were, his own or his family fate sealed, he tries to rise as high as he can. He can never be rich enough, because in capitalist society no wealth is eternal. In the past nobody could touch the feudal landlord. When his lands became less fertile he had less to consume, but as long as he did not get into debt he stayed on his property. The capitalist who lends out his capital and the entrepreneur who produces must stand the test of the market. Whoever invests unwisely, or produces too dearly, is ruined. Unhampered seclusion from the market no longer exists. Even landed fortunes cannot escape its influences; agriculture, too, must produce capitalistically. Today a man must earn or become poor.
Let those who wish to eliminate this coercion to work and enterprise understand quite clearly that they are proposing to undermine the foundations of our well-being. That in 1914 the earth nourished far more human beings than ever before, and that they all lived far better than their ancestors, was due entirely to the acquisitive instinct. If the diligence of modern industry were replaced by the contemplative life of the past, unnumbered millions would be doomed to death by starvation.
In the socialist society the lordly ease of government offices will take the place of the keen activity of modern financial houses and factories. The civil servant will supplant the energetic entrepreneur. Whether civilization will gain by it, we leave to the self-constituted judges of the world and its institutions to deride. Is the bureaucrat really the ideal human type, and must we aspire to fill the world with his kind at any price?
Many socialists describe with great enthusiasm the advantages of a society of civil servants over a society of profit-seekers.55 In a society of the latter kind (the Acquisitive Society), every one pursues only his own advantage; in the society of those devoted to their profession (the Functional Society) everyone does his duty in the service of the whole. This higher evaluation of officialdom, in so far as it does not rest on a misconception of the social order based on private ownership in the means of production, is merely a new form of that contempt for the work of the painstaking citizen in which feudal landowners, soldiers, literary men, and bohemians have always indulged.
The Cultural Achievements of Capitalism
The inexactness and untruthfulness of ethical Socialism, its logical inconsistencies and its lack of scientific criticism, characterize it as the philosophic product of a period of decay. It is the spiritual expression of the decline of European civilization at the turn of the nineteenth and twentieth centuries. Under its sway the German people and with them the whole of humanity were swept from the height of their culture to their deepest degradation. It created the mental premises for the World War and for Bolshevism. Its theories of violence were triumphant in the carnage of 1914-18, which brought to a close the finest flowering of civilization that world history has ever known.
In Ethical Socialism imperfect understanding of human social co-operation is combined with the resentment of the ne’er-do-well. It is the inability to understand the difficult problems of social life which renders ethical socialists so unsophisticated and so certain that they are competent to solve social problems offhand. Resentment strengthens that indignation which is always sure of a response from those of like mind. But the fire of their language comes from a romantic enthusiasm for unrestraint. In every man there is a deep-rooted desire for freedom from social ties; this is combined with a longing for conditions which fully satisfy all imaginable wishes and needs. Reason teaches us not to give way to the first unless we are prepared to sink back into the deepest misery, and reminds us further that the second cannot be fulfilled. Where reason ceases to function the way to romanticism is open. The anti-social in man triumphs over the mind.
The romantic movement, which addresses itself above all to the imagination, is rich in words. The colourful splendour of its dreams cannot be surpassed. Its praises awaken infinite longing, its curses breed loathing and contempt. Its longing is directed towards a past envisaged not soberly, but as a trans figured image, and towards a future which it paints with all the bright colours of desire. Between the two it sees the sober, everyday working life of bourgeois society and for this it feels only hatred and abhorrence. In the bourgeois it sees embodied everything that is shameful and petty. It roams the world at will, praises all ages and all lands; but for the conditions of the present day it has neither understanding nor respect.
The great creative minds, whom we honour above all others as Classics, understood the profound significance of the bourgeois order. The romanticists lack this insight. They are too small to sing the song of bourgeois society. They deride the citizen, despise “shopkeepers’ ethics,” laugh at the law. They are extraordinarily quick to see all the faults of everyday life and as quick to trace them back to defects in social institutions. No romantic has perceived the grandeur of capitalist society. Compare the results achieved by these “shopkeepers’ ethics” with the achievements of Christianity! Christianity has acquiesced in slavery and polygamy, has practically canonized war, has, in the name of the Lord, burnt heretics and devastated countries. The much abused “shopkeepers” have abolished slavery and serfdom, made woman the companion of man with equal rights, proclaimed equality before the law and freedom of thought and opinion, declared war on war, abolished torture, and mitigated the cruelty of punishment. What cultural force can boast of similar achievements? Bourgeois civilization has created and spread a well-being, compared with which all the court life of the past seems meagre. Before the War, even the less favoured classes of the urban population could not only clothe and nourish themselves respectably but could enjoy genuine art and undertake journeys into distant lands. The romantics, however, saw only those who were not so well-off; the reason for their comparative poverty being that bourgeois civilization had not yet created sufficient wealth to make everybody comfortable. The same romantics had no eyes for those who were already comfortably circumstanced.56 What they saw was always only invariably the dirt and the misery capitalist civilization had inherited from the past, not the values which it had already achieved.
The Slogan “Economic Democracy”
One of the more important arguments in favor of Socialism is that contained in the slogan “self-government by industry.” As in the political sphere the King’s absolutism was broken by the peoples’ right to share decisions and later by its sole right to decide, so the absolutism of owners of the means of production and of entrepreneurs is to be abolished by consumers and workers. Democracy is incomplete as long as everyone is obliged to submit to the dictatorship of the owners. The worst part of Capitalism is by no means inequality of income; more unbearable still is the power which it gives the capitalists over their fellow citizens. As long as this state of affairs continues there can be no personal freedom. The People must take the administration of economic matters into their own hands, just as they have taken over the government of the state.57
There is a double error in this argument. It misconceives on the one hand, the nature and function of political democracy, and on the other, the nature of the social order based on private ownership in the means of production.
We have already shown that the essence of democracy is to be found neither in the electoral system, nor in the discussions and resolutions of national councils, nor in any sort of committee appointed by these councils. These are merely the technical tools of political democracy. Its real function is to make peace. Democratic institutions make the will of the people effective in political matters, by ensuring that its rulers and administrators are elected by the people’s votes. Thus are eliminated those dangers to peaceful social development which might result from any clash between the will of the rulers and public opinion. Civil war is averted through the operation of institutions which facilitate a peaceful change of the government. In the economic order based on private ownership in the means of production no special institutions, such as political democracy has created for itself, are needed to achieve corresponding success. Free competition does all that is needed. All production must bend to the consumers’ will. From the moment it fails to conform to the consumers’ demands it becomes unprofitable. Thus free competition compels the obedience of the producer to the consumer’s will and also, in case of need, the transfer of the means of production from the hands of those unwilling or unable to achieve what the consumer demands in to the hands of those better able to direct production. The lord of production is the consumer. From this point of view the capitalist society is a democracy in which every penny represents a ballot paper. It is a democracy with an imperative and immediately revocable mandate to its deputies.58
It is a consumers’ democracy. By themselves the producers, as such, are quite unable to order the direction of production. This is as true of the entrepreneur as of the worker; both must bow ultimately to the consumers’ wishes. And it could not well be otherwise. People produce, not for the sake of production, but for the goods that may be consumed. As producer in an economy based on the division of labour, a man is merely the agent of the community and as such has to obey. Only as a consumer can he command.
The entrepreneur is thus no more than an overseer of production. He of course exercises power over the worker. But he cannot exercise it arbitrarily. He must use it in accordance with the requirements of that productive activity which corresponds to the consumers’ wishes. To the individual wage-earner whose outlook is enclosed by the narrow horizon of daily work, the entrepreneur’s decisions may seem arbitrary and capricious. Seen from too close up the shape of things lose their true significance. If the entrepreneur’s disposal of production injures the worker’s momentary interest, it is sure to seem to him unfounded and arbitrary. He will not realize that the entrepreneur works under the rule of a strict law. True, the entrepreneur is free to give full rein to his whims, to dismiss workers off hand, to cling stubbornly to antiquated processes, deliberately to choose unsuitable methods of production and to allow himself to be guided by motives which conflict with the demands of consumers. But when and in so far as he does this he must pay for it, and if he does not restrain himself in time he will be driven, by the loss of his property, into a position where he can inflict no further damage. Special means of controlling his behavior are unnecessary. The market controls him more strictly and exactingly than could any government or other organ of society.59
Every attempt to replace this rule of the consumers by a rule of producers is absurd. It would run contrary to the very nature of the productive process. We have already treated an example of this in greater detail—the example most important for modern conditions—the example of the syndicalist economy. What is true of it, is true of any producers’ policy. All economy must be a consumers’ economy. The absurdity of these endeavours to institute “economic democracy” by the creation of syndicalist institutions becomes apparent if we imagine these institutions transferred to the political field. For example, would it be democracy if judges had to decide what laws should be in force and how they should be administered? Or if soldiers had to decide at whose disposal they would place their arms and how to use them? No, judges and solders have to conform to law if the state is not to become an arbitrary despotism. The catchword “industrial self-government” is the most blatant of all misconceptions of the nature of democracy.
In the socialist community, too, it is not the workers in separate branches of production who decide what is to be done in their own particular economic territory, but the supreme authority of society. If this were not so, we should have not Socialism but Syndicalism, and between these two there is no possible compromise.
The Consumer as the Deciding Factor in Production
People sometimes maintain that in guarding their own interests entrepreneurs force production in a direction opposed to the interests of consumers. The entrepreneurs have no scruples about “creating or intensifying the public’s need for things which provide for merely sensual gratification but inflict harm on health or spiritual welfare.” For instance the fight against alcoholism, the dread menace to national health and welfare, is said to be made more difficult because of the opposition “of the vested interests of alcohol capitalism to all attempts to combat it.” The habit of smoking would not be “so widespread and so greatly on the increase among the young if economic interests played no role in promoting it.” “Luxury articles, baubles and tinsel of all kinds, trashy and obscene publications” are today “forced upon the public because the producers profit by them or hope to do so.”60 It is common knowledge that the large-scale arming of the Powers and therefore, indirectly, war itself are ascribed to the machinations of “armament-capital.”
Entrepreneurs and capitalists in search of investments turn towards those branches of production from which they hope to obtain the greatest profit. They try to fathom the future wants of consumers so as to gain a general survey of demand. As Capitalism is constantly creating new wealth for all and extending the satisfaction of wants, consumers are frequently in the position of being able to satisfy wants which formerly remained unsatisfied. Thus it becomes a special task of the capitalist entrepreneur to find out what formerly unsatisfied wants can now be provided for. This is what people have in mind when they say that Capitalism creates wants in order to satisfy them.
The nature of the things demanded by the consumer does not concern the entrepreneur and the capitalist. They are merely the obedient servants of the consumer and it is not their business to prescribe what the consumer shall enjoy. They give him poison and murderous weapons if he wants them. But nothing could be more erroneous than to suppose that products which serve a bad or harmful purpose bring in more than those which serve a good one. The highest profit is obtained from articles for which there is the most urgent demand. The profit-seeker therefore sets about producing those commodities in which there is the greatest disproportion between supply and demand. Of course, once he has invested his capital, it is to his interest to see that the demand for his product increases. He tries to expand sales. But in the long run he cannot prevail against a change of demand. Neither can he obtain much advantage from growth in the demand for his products, for new enterprises turn their attention to his branch of industry and thereby tend to reduce his profits to the average.
Mankind does not drink alcohol because there are breweries, distilleries, and vineyards; men brew beer, distil spirits, and grow grapes because of the demand for alcoholic drinks. “Alcohol-capital” has not created drinking habits any more than it has created drinking songs. The capitalists who own shares in breweries and distilleries would have preferred shares in publishing firms for devotional books, had the demand been for spiritual and not spirituous substance. “Armament capital” did not create wars; wars created “armament capital.” It was not Krupp and Schneider who incited the nations to war, but imperialist writers and politicians.
If a man thinks alcohol and nicotine harmful, let him abstain from them. Let him try, if he will, to convert his fellows to his own views on abstinence. What is certain is that he cannot, in a capitalist society, whose basic principle is the self-determination and self-responsibility of each individual, force them against their will to renounce alcohol and nicotine. If this inability to impose his will on others causes him regret, then at least he can console himself with the thought that neither is he at the mercy of the commands of others.
Some socialists reproach the capitalist social order primarily for the rich variety of its goods. Instead of producing uniform products, which could be brought out on the largest scale, people manufacture hundreds and thousands of types of each commodity, and production is made much more expensive thereby. Socialism would put at the comrades’ disposal only uniform goods; it would unify production and thereby raise national productivity. Simultaneously Socialism would dissolve separate family households, and in their place provide communal kitchens and hotel-like dwellings; this, too, would increase social wealth by eliminating the waste of labour power in tiny kitchens which serve only a few consumers. Many socialist writings, above all those of Walter Rathenau, have dealt with these ideas in great detail.61
Under Capitalism each buyer has to decide whether he prefers the cheaper uniformity of mass production or the greater expense of articles specially manufactured to suit the taste of the individual or the small group. There is unmistakably a tendency towards progressive uniformity of production and consumption through standardization. Commodities used in the productive process itself are daily becoming more standardized. The shrewd entrepreneur soon discovers the advantage of using the standard type—with its lower purchasing cost, its replaceability and adaptability to other productive processes rather than articles produced by a special process. The movement to standardize the implements of production is impeded today by the fact that numerous enterprises are indirectly or directly socialized. As they are not rationally controlled, no stress is laid on the advantage of using standard types. Army administrations, municipal building departments, State railways, and similar authorities resist, with bureaucratic obstinacy, the adoption of types in universal use. The unification of the production of machines, factory equipment and semi-finished products does not require a change to Socialism. On the contrary, Capitalism does this more quickly of its own accord.
It is otherwise with goods for use and consumption. If a man satifies his special, personal taste in preference to using the uniform products of mass production and believes that his satisfaction balances the extra cost, then one cannot objectively prove him wrong. If my friend prefers to dress, be housed, and eat as it pleases him and not to do as everyone else does, who can blame him? For his happiness lies in the satisfaction of his wishes; he wants to live as he pleases and not as I or others would live were we in his place. It is his valuation that counts, not mine or other people’s. I may be able to prove to him that the judgments on which he bases his values are false. For example I may demonstrate that the foods he consumes have a smaller nutritional value than he assumed. But if his values have been built, not on untenable views about the relation of cause and effect, but on subjective sentiments and feelings, my arguments cannot change his mind. If, notwithstanding the advantages claimed for hotel life and communal kitchens, he still prefers a separate household because such sentiments as “own home” and “own hearth” weigh with him more than arguments in favour of unitary organization, then nothing further remains to be said. If he wishes to furnish his dwelling according to his personal taste and not according to the public taste which guides the furniture manufacturer, there are no arguments with which to refute him. If, knowing the effects of alcohol, he still drinks it, because he is prepared to pay even dearly for the pleasure it gives him, I may certainly, from the standpoint of my values, call him unwise, but it is his will, his valuation that will decide. If I, as a dictator, or as a member of a despotically ruling majority, prohibit the drinking of alcohol, I do not thus raise the productivity of social production. Those who condemn alcohol would have avoided it without prohibition. For all others, the prohibition of an enjoyment which they value above anything they can obtain by renouncing it means a falling-off in satisfaction.
The contrast of productivity and profitableness, which, as we see from arguments explained in a previous chapter, is valueless for the understanding of the working of production directed to given ends, must lead definitely to false conclusions if applied to the ends of economic action.62 In dealing with means to a given end, one may call this process or that the more practical, that is, capable of a higher yield. But when we ask whether this or that means gives a greater direct increase of welfare to the individual, we have no objective standards that will serve. Here the subjective will of man is the deciding factor. A man’s preference for water, milk, or wine does not depend on the physiological effects of these drinks, but on his valuation of the effects. If a man drinks wine and not water I cannot say he is acting irrationally. At most I can say that in his place I would not do so. But his pursuit of happiness is his own business, not mine.
If the socialist community does not supply the comrades with the goods which they themselves want to enjoy, but with those which the rules think they ought to enjoy, the sum of satisfactions is not increased, but diminished. One certainly could not call this violation of the individual will “economic democracy.”
For it is an essential difference between capitalist and socialist production that under Capitalism men provide for themselves, while under Socialism they are provided for. The socialist wants to feed and house humanity and cover its nakedness. But men prefer to eat, dwell, dress and generally to seek happiness after their own fashion.
Socialism as Expression of the Will of the Majority
The number of our contemporaries who decide in favour of Socialism because the majority has already so decided is by no means negligible. “Most people want Socialism; the masses no longer support the capitalist social order, therefore we must socialize.” One hears this constantly. But it is not a convincing argument in the eyes of those who reject Socialism. Certainly if the majority want Socialism, Socialism we shall have. Nobody has shown more clearly than the liberal philosophers that there is no resisting public opinion, and that the majority decides, even when it is in error. If the majority makes a mistake, the minority must also suffer the consequences and cannot complain. Has it not been party to the error in having failed to enlighten the majority?
But in discussing what is to be, the argument that the great mass of people violently demand Socialism would be valid only if Socialism were desired as an ultimate end for its own sake. But this is by no means so. Like all other forms of social organization Socialism is only a means, not an end in itself. Those who want Socialism, like those who reject it, want well-being and happiness, and they are socialists only because they believe that Socialism is the best way to achieve this. If they were convinced that the liberal order of society was better able to fulfill their wishes they would become liberals. Therefore, the argument that one must be socialist because the masses demand Socialism is the worst possible argument against an enemy of Socialism. The will of the people is the highest law for the representatives of the people who have to execute its commands. But those who seek to direct thought must not bend to this will. Only he is a pioneer who speaks out and attempts to bring his fellow citizens to his ways of thinking, even when they differ from those generally held. This argument that one should defer to the masses is nothing else than a demand that those who still oppose Socialism by reasonable criticism should abdicate reason itself. That such an argument can be put forward only shows how far the socialization of intellectual life has already gone. In the very darkest epochs of early history, such arguments have not been used. Those who opposed the prejudices of the greatest number were never told that their opinions were false simply because the majority thought otherwise.
If Socialism is inherently impracticable the fact that everyone desires it will not enable us to accomplish it.
Capitalist Ethics and the Impracticability of Socialism
In the expositions of Ethical Socialism one constantly finds the assertion that it presupposes the moral purification of men. As long as we do not succeed in elevating the masses morally we shall be unable to transfer the socialist order of society from the sphere of ideas to that of reality. The difficulties in the way of Socialism lie exclusively, or predominantly, in men’s moral shortcomings. Some writers doubt whether this obstacle will ever be overcome; others are content to say that the world will not be able to achieve Socialism for the present or in the immediate future.
We have been able to show why the socialist economy is impracticable: not because men are morally too base, but because the problems that a socialist order would have to solve present insuperable intellectual difficulties. The impracticability of Socialism is the result of intellectual, not moral, incapacity. Socialism could not achieve its end, because a socialist economy could not calculate value. Even angels, if they were endowed only with human reason, could not form a socialistic community.
If a socialist community were capable of economic calculation, it could be set up without any change in men’s moral character. In a socialist society different ethical standards would prevail from those of a society based on private ownership in the means of production. The temporary sacrifices demanded of the individual by society would be different. Yet it would be no more difficult to enforce the code of socialist morals than it is to enforce the code of capitalist morals, if there were any possibility of making objective computations within the socialist society. If a socialist society could ascertain separately the product of the labour of each single member of the society, his share in the social product could be calculated and his reward fixed proportionately to his productive contribution. Under such circumstances the socialist order would have no cause to fear that a comrade would fail to work with the maximum of energy for lack of any incentive to sweeten the toil of labour. Only because this condition is lacking, Socialism will have to construct for its Utopia a type of human being totally different from the race which now walks the earth, one to whom labour is not toil and pain, but joy and pleasure. Because such a calculus is out of the question, the Utopian socialist is obliged to make demands on men which are diametrically opposed to nature. This inadequacy of the human type which would cause the breakdown of Socialism, may appear to be of a moral order; on closer examination it turns out to be a question of intellect.
The Alleged Defects of Capitalist Ethics
To act reasonably means to sacrifice the less important to the more important. We make temporary sacrifices when we give up small things to obtain bigger things, as when we cease to indulge in alcohol to avoid its physiological after-effects. Men submit to the effort of labour in order that they may not starve.
Moral behaviour is the name we give to the temporary sacrifices made in the interests of social co-operation, which is the chief means by which human wants and human life generally may be supplied. All ethics are social ethics. (If it be claimed that rational behaviour, directed solely towards one’s own good, should be called ethical too, and that we had to deal with individual ethics and with duties to oneself, we could not dispute it; indeed this mode of expression emphasizes perhaps better than ours, that in the last analysis the hygiene of the individual and social ethics are based on the same reasoning.) To behave morally, means to sacrifice the less important to the more important by making social co-operation possible.
The fundamental defect of most of the anti-utilitarian systems of ethics lies in the misconstruction of the meaning of the temporary sacrifices which duty demands. They do not see the purpose of sacrifice and foregoing of pleasure, and they construct the absurd hypothesis that sacrifice and renunciation are morally valuable in themselves. They elevate unselfishness and self-sacrifice and the love of compassion, which lead to them, to absolute moral values. The pain that at first accompanies the sacrifice is defined as moral because it is painful—which is very near asserting that all action painful to the performer is moral.
From the discovery of this confusion we can see why various sentiments and actions which are socially neutral or even harmful come to be called moral. Of course, even reasoning of this sort cannot avoid returning furtively to utilitarian ideas. If we are unwilling to praise the compassion of a doctor who hesitates to undertake a life-saving operation on the ground that he thereby saves the patient pain, and distinguish, therefore, between true and false compassion, we re-introduce the teleological consideration of purpose which we tried to avoid. If we praise unselfish action, then human welfare, as a purpose, cannot be excluded. There thus arises a negative utilitarianism: we are to regard as moral that which benefits, not the person acting, but others. An ethical ideal has been set up which cannot be fitted into the world we live in. Therefore, having condemned the society built up on “self-interest” the moralist proceeds to construct a society in which human beings are to be what his ideal requires. He begins by misunderstanding the world and laws; he then wishes to construct a world corresponding to his false theories, and he calls this the setting up of a moral ideal.
Man is not evil merely because he wants to enjoy pleasure and avoid pain—in other words, to live. Renunciation, abnegation, and self-sacrifice are not good in themselves. To condemn the ethics demanded by social life under Capitalism and to set up in their place standards for moral behaviour which—it is thought—might be adopted under Socialism is a purely arbitrary procedure.
The Motive Powers of Destructionism
The Nature of Destructionism
To the socialist, the coming of Socialism means a transition from an irrational to a rational economy. Under Socialism, planned management of economic life takes the place of anarchy of production; society, which is conceived as the incarnation of reason, takes the place of the conflicting aims of unreasonable and self-interested individuals. A just distribution replaces an unjust distribution of goods. Want and misery vanish and there is wealth for all. A picture of paradise is unfolded before us, a paradise which—so the laws of historical evolution tell us—we, or at least our heirs, must at length inherit. For all history leads to that promised land, and all that has happened in the past has only prepared the way for our salvation.
This is how our contemporaries see Socialism, and they believe in its excellence. It is false to imagine that the socialist ideology dominates only those parties which call themselves socialist or—what is generally intended to mean the same thing—“social.” All present-day political parties are saturated with the leading socialistic ideas. Even the stoutest opponents of Socialism fall within its shadow. They, too, are convinced that the socialist economy is more rational than the capitalist, that it guarantees a more just distribution of income, that historical evolution is driving man inexorably in that direction. When they oppose Socialism they do so with the sense that they are defending selfish private interests and that they are combating a development which from the standpoint of public welfare is desirable and is based upon the only ethically acceptable principle. And in their hearts they are convinced that their resistance is hopeless.
Yet the socialist idea is nothing but a grandiose rationalization of petty resentments. Not one of its theories can withstand scientific criticism and all its deductions are ill-founded. Its conception of the capitalist economy has long been seen to be false; its plan of a future social order proves to be inwardly contradictory, and therefore impracticable. Not only would Socialism fail to make economic life more rational, it would abolish social cooperation outright. That it would bring justice is merely an arbitrary assertion, arising, as we can show, from resentment and the false interpretation of what takes place under Capitalism. And that historical evolution leaves us no alternative but Socialism turns out to be a prophecy which differs from the chiliastic dreams of primitive Christian sectarians only in its claim to the title “science.”
In fact Socialism is not in the least what it pretends to be. It is not the pioneer of a better and finer world, but the spoiler of what thousands of years of civilization have created. It does not build; it destroys. For destruction is the essence of it. It produces nothing, it only consumes what the social order based on private ownership in the means of production has created. Since a socialist order of society cannot exist, unless it be as a fragment of Socialism within an economic order resting otherwise on private property, each step leading towards Socialism must exhaust itself in the destruction of what already exists.
Such a policy of destructionism means the consumption of capital. There are few who recognize this fact. Capital consumption can be detected statistically and can be conceived intellectually, but it is not obvious to everyone. To see the weakness of a policy which raises the consumption of the masses at the cost of existing capital wealth, and thus sacrifices the future to the present, and to recognize the nature of this policy, requires deeper insight than that vouchsafed to statesmen and politicians or to the masses who have put them into power. As long as the walls of the factory buildings stand, and the trains continue to run, it is supposed that all is well with the world. The increasing difficulties of maintaining the higher standard of living are ascribed to various causes, but never to the fact that a policy of capital consumption is being followed.
In the problem of the capital consumption of a destructionist society we find one of the key problems of the socialist economic policy. The danger of capital consumption would be particularly great in the socialist community; the demagogue would achieve success most easily by increasing consumption per head at the cost of the formation of additional capital and to the detriment of existing capital.
It is in the nature of capitalist society that new capital is continually being formed. The greater the capital fund becomes, the higher does the marginal productivity of labour rise and the higher, therefore, are wages, absolute and relative. The progressive formation of capital is the only way to increase the quantity of goods which society can consume annually without diminishing production in the future—the only way to increase the workers’ consumption without harm to future generations of workers. Therefore, it has been laid down by Liberalism that progressive capital formation is the only means by which the position of the great masses can be permanently improved. Socialism and destructionism seek to attain this end in a different way. They propose to use up capital so as to achieve present wealth at the expense of the future. The policy of Liberalism is the procedure of the prudent father who saves and builds for himself and his successors. The policy of destructionism is the policy of the spendthrift who dissipates his inheritance regardless of the future.
To Marxians, Karl Marx’s supreme achievement lay in the fact that he roused the proletariat to class-consciousness. Before he wrote, socialist ideas had led an academic existence in the writings of the Utopians and in the narrow circles of their disciples. By connecting these ideas with a revolutionary workers’ movement, which till then had only a petty bourgeois aim, Marx created, say the Marxians, the foundations of the proletarian movement. This movement, they believe, will live until it has accomplished its historical mission, the setting up of the socialist order of society.
Marx is supposed to have discovered the dynamic laws of capitalist society and, with the aid of the theory of historical evolution, to have defined the aims of the modern social movement as inevitable consequences of that evolution. He is said to have shown that the proletariat could free itself as a class only by itself abolishing the class conflict, and so making possible a society in which “the free development of each individual is the condition for the free development of all.”
Ecstatic enthusiasts see in Marx one of the heroic figures of world history, and class him among the great economists and sociologists, even among the most eminent philosophers. The unbiased observer looks on Karl Marx’s work with different eyes. As an economist Marx entirely lacked originality. He was a follower of the Classical political economists, but he lacked the ability to approach essentially economic problems without a political bias. He saw everything through the spectacles of the agitator, who considers first and foremost the effect made on the popular mind. Even here he was not really original, for the English socialist defenders of the “right to the full produce of labour,” who with their pamphlets in the third and fourth decades of the nineteenth century prepared the way for Chartism, had already anticipated him in all essentials. Moreover, he had the misfortune to be entirely ignorant of the revolution in theoretical economics which was proceeding during the years when he worked out his system, a transformation which made itself known soon after the issue of the first volume of Das Kapital. As a result, the later volumes of Das Kapital, from the day they were published, were quite out of touch with modern science. This was a piece of bad luck which hit his infatuated followers particularly hard. From the beginning, they had to be content with barren expositions of the master’s writings. They have timidly avoided any contact with the modern theory of value. As a sociologist and historical philosopher Marx was never more than an able agitator writing for the daily needs of his party. The materialist conception of history is scientifically worthless; moreover Marx never worked it out exactly but propounded it in various incompatible forms. His philosophic standpoint was that of the Hegelians. He is one of the many writers of his time, now mostly forgotten, who applied the dialectic method to all fields of science. Decades had to pass before people had the face to call him a philosopher and to place him side by side with the great thinkers.
As a scientific writer Marx was dry, pedantic, and heavy. The gift of expressing himself intelligibly had been denied him. In his political writings alone does he produce powerful effects, and these only by means of dazzling antitheses and of phrases which are easy to remember, sentences which by play of words hide their own vacuity. In his polemics he does not hesitate to distort what his own opponent had said. Instead of refuting he tends to abuse.1 Here, too, his disciples (his school really exists only in Germany and Eastern Europe, especially in Russia) have faithfully imitated the master’s example, reviling their opponents but never attempting to refute them by argument.
Marx’s originality and historical significance lie entirely in the field of political technique. He recognizes the immense social power that can be achieved by welding out of the great masses of workers, herded together in workshops, a political factor; and he seeks and finds the slogans to unite these masses into a coherent movement. He produces the catchword which leads people otherwise indifferent to politics to attack private property. He preaches a doctrine of salvation which rationalizes their resentment and transfigures their envy and desire for revenge into a mission ordained by world history. He inspires them with consciousness of their mission by greeting them as those who carry in themselves the future of the human race. The rapid expansion of Socialism has been compared to that of Christianity. More appropriate, perhaps, would be a comparison with Islam, which inspired the sons of the desert to lay waste ancient civilizations, cloaked their destructive fury with an ethical ideology and stiffened their courage with rigid fatalism.2
At the core of Marxism is the doctrine of the identity of interests of all proletarians. As an individual, however, the worker is daily in sharp competitive conflict with his fellow-workers and with those who are quite ready to take his job from him; together with his own comrades in his own trade he competes with workers in other branches of the trade and with the consumers of the products in the production of which he collaborates. In the face of all these facts, all his passions had to be raised to induce him to seek his salvation in union with other workers. But this was not so very difficult; it always pays to rouse what is evil in the human heart. Yet Marx has done more: he has decked out the resentment of the common man with the nimbus of science, and has thus made it attractive to those who live on a higher intellectual and ethical plane. Every socialist movement has borrowed in this respect from Marx, adapting the doctrine slightly for its special needs.
As a master of demagogic technique Marx was a genius; this cannot be sufficiently emphasized. He found the propitious historical moment for uniting the masses into a single political movement, and was himself on the spot to lead this movement. For him all politics was only the continuation of war by other means; his political art was always political tactics. The socialist parties which trace their origin back to Marx have kept this up, as have those who have taken the Marxist parties for their model. They have elaborated the technique of agitation, the cadging for votes and for souls, the stirring up of electoral excitement, the street demonstrations, and the terrorism. To learn the technique of these things requires years of hard study. At their party conferences and in their party literature, the Marxians give more attention to questions of organization and of tactics than to the most important basic problems of politics. In fact, if one wished to be more precise one would have to admit that nothing interests them at all except from the point of view of party tactics and that they have no interest to spare for anything else.
This militarist attitude to politics, which reveals the inner affinity of Marxism with Prussian and Russian etatism has quickly found adherents. The modern parties of the continent of Europe have completely accepted the Marxian ideology. Especially the parties which aim to promote particular interests, and which gather together the peasant class, the industrial middle class and the class of employers, make use of the Marxist doctrine of class-war for their own purposes. They have learnt all they know from Marxism.
The defeat of the liberal ideology could not long be postponed. Liberalism has anxiously avoided all political artifice. It has relied entirely upon the inner vitality of its ideas and their power to convince, and has disdained all other means of political conflict. It has never pursued political tactics, never stooped to demagogy. The old Liberalism was honest through and through and faithful to its principles. Its opponents called this being “doctrinaire.”
Today the old liberal principles have to be submitted to a thorough reexamination. Science has been completely transformed in the last hundred years, and today the general sociological and economic foundations of the liberal doctrine have to be relaid. On many questions Liberalism did not think logically to the conclusion. There are loose threads to be gathered up.3 But the mode of political activity of Liberalism cannot alter. It regards all social co-operation as an emanation of rationally recognized utility, in which all power is based on public opinion, and can undertake no course of action that would hinder the free decision of thinking men. Liberalism knows that society can advance to a higher stage only by men recognizing the usefulness of social co-operation; that neither God nor veiled destiny determines the future of the human race, but only man himself. When nations rush blindly towards destruction, Liberalism must try to enlighten them. But even if they do not hear, whether because they are deaf or because the warning voice is too feeble, one must not seek to seduce them to the right mode of conduct by tactical and demagogic artifice. It might be possible to destroy society by demagogy. But it can never be built up by that means.
The Destructionism of the Literati
The romantic and the social art of the nineteenth century have prepared the way for socialist destructionism. Without the help it got from this direction Socialism would never have gained its hold on people’s minds.
Romanticism is man’s revolt against reason, as well as against the condition under which nature has compelled him to live. The romantic is a daydreamer; he easily manages in imagination to disregard the laws of logic and of nature. The thinking and rationally acting man tries to rid himself of the discomfort of unsatisfied wants by economic action and work; he produces in order to improve his position. The romantic is too weak—too neurasthenic—for work; he imagines the pleasures of success but he does nothing to achieve them. He does not remove the obstacles; he merely removes them in imagination. He has a grudge against reality because it is not like the dream world he has created. He hates work, economy, and reason.
The romantic takes all the gifts of a social civilization for granted and desires, in addition, everything fine and beatiful that, as he thinks, distant times and countries had or have to offer. Surrounded by the comforts of European town life he longs to be an Indian rajah, Bedouin, corsair, or troubadour. But he sees only that portion of these people’s lives which seems pleasant to him, never their lack of the things he obtains in such abundance. His horsemen gallop over the plains on fiery steeds, his corsairs capture beautiful women, his knights vanquish their enemies between episodes of love and song. The perilous nature of their existence, the comparative poverty of their circumstances, their miseries and their toils—these things his imagination tactfully overlooks: all is transfigured by a rosy gleam. Compared with this dream ideal, reality appears arid and shallow. There are obstacles to overcome which do not exist in the dream. There are very different tasks to be undertaken. Here are no beautiful women to be rescued from the hands of robbers, no lost treasures to be found, no dragons to kill. Here there is work to do, ceaselessly, assiduously, day after day, year after year. Here one must plough and sow if one wishes to reap. The romantic does not choose to admit all this. Obstinate as a child, he refuses to recognize it. He mocks and jeers; he despises and loathes the bourgeois.
The spread of capitalist thought produced an attitude of mind unfriendly to Romanticism. The poetic figures of knights and pirates become objects of mirth. Now that the lives of Bedouins, maharajahs, pirates, and other romantic heroes had been observed at close quarters, any desire to emulate them vanished. The achievements of the capitalist social order made it good to be alive and there was a growing feeling that security of life and liberty, peaceful welfare, and richer satisfaction of wants could be expected only from Capitalism. The romantic contempt for what is bourgeois fell into disrepute.
But the mental attitude from which Romanticism sprang was not so easy to eradicate. The neurasthenic protest against life sought other forms of expression. it found it in the “social” art of the nineteenth century.
The really great poets and novelists of the period were not social-political propagandist writers. Flaubert, Maupassant, Jacobsen, Strindberg, Konrad Ferdinand Meyer, to name only a few, were far from being followers of the fashionable literature. We do not owe the statement of these social and political problems to the writers whose works have given the nineteenth century its lasting place in the history of literature. This was the task assumed by second- or third-rate writers. It was writers of this class who introduced as literary figures the bloodsucking capitalist entrepreneur and the noble proletarian. To them the rich man is in the wrong because he is rich, and the poor in the right because he is poor.4 “But this is just as if wealth were a crime,” Gerhart Hauptmann makes Frau Dreissiger exclaim in Die Weber. The literature of this period is full of the condemnation of property.
This is not the place for an aesthetic analysis of these works; our task is to examine their political efforts. They have brought victory to Socialism by enlisting the allegiance of the educated classes. By means of such books Socialism has been carried into the houses of the wealthy, captivating the wives and daughters and causing the sons to turn away from the family business until at last the capitalist entrepreneur himself has begun to believe in the baseness of his activities. Bankers, captains of industry, and merchants have filled the boxes of theatres in which plays of a socialist tendency were given before enthusiastic audiences.
Social art is tendentious art: all social literature has a thesis to demonstrate.5 It is ever the same thesis: Capitalism is an evil, Socialism is salvation. That such eternal repetition has not led to boredom sooner must be attributed solely to the fact that the various writers have had different forms of Socialism in mind. But they all follow Marx’s example in avoiding detailed exposition of the socialist social order they praise; most of them merely indicate by allusion, though clearly enough, that they desire a socialist order. That the logic of their argument is inadequate and that the conclusions are driven home by an appeal to the emotions rather than to reason is hardly surprising, seeing that the same method is followed by soi-disant scientific authorities on Socialism. Fiction is a favoured vehicle for this kind of procedure, as there is little fear that anyone will try to refute its assertions in detail by logical criticism. It is not the custom to inquire into the accuracy of particular remarks in novels and plays. Even if it were, the author could still find a way out by denying responsibility for the particular words put into the mouth of a hero. The conclusions forced home by character-drawing cannot be invalidated by logic. Even if the “man of property” is always depicted as bad through and through, one cannot reproach the author on account of a simple example. For the total effect of the literature of his time no single writer is responsible.
In Hard Times Dickens puts into the mouth of Sissy Jupe, the deserted little daughter of a circus clown and dancer, remarks designed to shatter Utilitarianism and Liberalism. He makes Mr. M’Choackumchild, teacher in the model school of the Benthamite capitalist Gradgrind, ask how great is the percentage of victims when, out of 100,000 sea travellers, 500 are drowned. The good child answers, that for the relatives and friends of the victims there is no percentage—and so condemns with quiet simplicity the self-complacency of Manchesterism. Leaving aside the far-fetched improbability of the scene, this is of course all very fine and touching. But it does not diminish the satisfaction which members of a capitalist community may feel when they contemplate the great reduction of the dangers of navigation under Capitalism. And if Capitalism has so contrived that out of 1,000,000 people only twenty-five starve each year, while under more ancient economic systems a much greater proportion starved, then our estimation of this achievement is not impaired by Sissy’s platitude, that for those who starve the ordeal is just as bitter when a million or a million million others are starving at the same time or not. Moreover, we are offered no proof that in a socialist society fewer people would starve. The third observation which Dickens puts into Sissy’s mouth is intended to show that one cannot judge the economic prosperity of a nation by the amount of its wealth, but one must consider also the distribution of that wealth. Dickens was too ignorant of the writings of the utilitarians to know that these views did not contradict the older utilitarianism. Bentham, particularly, maintained with special emphasis that a sum of wealth brings more happiness when it is evenly distributed than when it is so distributed as to endow some richly while others have little.6
Sissy’s counterpart is the model boy, Bitzer. He gets his mother into the workhouse and then contents himself with giving her half a pound of tea once a year. Even this, says Dickens, is a weakness in the otherwise admirable youth, whom he calls an excellent young economist. For one thing, all almsgiving inevitably tends to pauperize the recipient. Further, Bitzer’s only rational action with regard to tea would have been to buy as cheaply, and sell it as dearly as possible. Have not philosophers demonstrated that in this consists the whole duty of man (the whole, not a part of his duty)? Millions who have read these observations have felt the indignation for the baseness of utilitarian thought which the author meant them to feel. Nevertheless, they are quite unjust. It is true that liberal politicians have striven against the encouragement of beggars by means of indiscriminate almsgiving and have shown the futility of any attempt at bettering the situation of the poor which does not proceed by increasing the productivity of labour. They have exposed the danger to the proletarians themselves of proposals for increasing the birth rate by premature marriages between persons not in a position to take care of their children. But they have never protested against support through the Poor Law of people unable to work. Neither have they contested the moral duty of children to support their parents in old age. The liberal social philosophy has never said that it was a “duty,” let alone the beginning and end of morality, to buy as cheaply as possible and sell as dearly as possible. It has shown that this is the rational behaviour for the individual seeking (by buying and selling) the means for the indirect satisfaction of his wants. But Liberalism has no more called it irrational to give tea to one’s aged mother than it has called tea drinking in itself irrational.
One glance into the works of the utilitarians is enough to unmask these sophistical distortions. But there is hardly one in every hundred thousand readers of Dickens who has ever read a line of a utilitarian writer. Dickens, with other romantics less gifted as storytellers but following the same tendencies, has taught millions to hate Liberalism and Capitalism. And yet Dickens was not an open and direct champion of destructionism, any more than were William Morris, Shaw, Wells, Zola, Anatole France, Gerhart Hauptmann, Edmondo de Amicis, and many others. They all reject the capitalist social order and combat private ownership in the means of production, without perhaps always being conscious of it. Between the lines they suggest an inspiring picture of a better state of affairs economically and socially. They are recruiting agents for Socialism and, since Socialism must destroy society, are at the same time paving the way for destructionism. But just as political Socialism became finally, in Bolshevism, an open avowal of destructionism, so too did literary Socialism. Tolstoy is the great prophet of a destructionism that goes back to the words of the Gospels. He makes the teachings of Christ, which rested on a belief that the Kingdom of God was imminent, a gospel for all times and all men. Like the communist sects of the Middle Ages and the Reformation he tries to build society on the commands of the Sermon on the Mount. He does not of course go so far as to take literally the exhortation to follow the example of the lilies of the field, which toil not. But in his idea of society there is only room for self-sufficing agriculturists who, with modest means, till a small piece of land, and he is logical enough to demand that everything else shall be destroyed.
And now the peoples which have hailed with the greatest enthusiasm such writings, which call for the destruction of all cultural values, are themselves on the verge of a great social catastrophe.
The Methods of Destructionism
The Means of Destructionism
Socialist policy employs two methods to accomplish its purposes: the first aims directly at converting society to Socialism; the second aims only indirectly at this conversion by destroying the social order which is based on private ownership. The parties of social reform and the evolutionary wings of the socialist parties prefer the first means; the second is the weapon of revolutionary Socialism, which is primarily concerned to clear the ground for building up a new civilization by liquidating the old one. To the first category belong municipalization and nationalization of enterprises; to the second, sabotage and revolution.
The importance of this division is lessened materially by the fact that the effects achieved by both groups do not greatly differ. As we have shown, even the direct method which aims at the creation of a new society can only destroy; it cannot create. Thus the beginning and end of the socialist policy, which has dominated the world for decades, is destruction. In the policy of the communists the will to destroy is so clear that no one can overlook it. But although destructionism is more easily recognized in the actions of the Bolshevists than in other parties, it is essentially just as strong in all other socialist movements. State interference in economic life, which calls itself “economic policy,” has done nothing but destroy economic life. Prohibitions and regulations have by their general obstructive tendency fostered the growth of the spirit of wastefulness. Already during the war period this policy had gained so much ground that practically all economic action of the entrepreneur was branded as violation of the law. That production is still being carried on, even semi-rationally, is to be ascribed only to the fact that destructionist laws and measures have not yet been able to operate completely and effectively. Were they more effective, hunger and mass extinction would be the lot of all civilized nations today.
Our whole life is so given over to destructionism that one can name hardly a field into which it has not penetrated. “Social” art preaches it, schools teach it, the churches disseminate it. In recent decades the legislation of civilized states has created hardly one important law in which at least a few concessions have not been made to destructionism; some laws it completely dominates. To give a comprehensive account of destructionism one would have to write the history of the years in which the catastrophic World War and the Bolshevist Revolution were prepared and consummated. This cannot be undertaken here. We must content ourselves with a few remarks which may contribute to an understanding of destructionist development.
Amongst the means destructionist policy has employed, the legal protection of labour is, in its direct effects, the most harmless. Yet this aspect of social policy is specially important as an outcome of destructionist thought.
The advocates of the protection of labour like to consider the problem as analogous to the situation which led to the measures taken in the eighteenth and the first half of the nineteenth century to protect tied labourers under the manorial system. Just as at that time the peasant’s labour obligations were continually reduced by State intervention in an attempt to free the serf step by step, so labour legislation at the present day is supposed to be no more than the attempt to raise the modern proletarian from wage slavery to an existence worthy of a human being. But this comparison is quite invalid. The restriction of the labour duties of the serf did not diminish, but rather increased the amount of work done in the country. Forced labour, poor in quality and in quantity, was reduced so that the peasant would be free to improve his own bit of land or work for hire. Most of the measures taken in favour of the unfree peasant aimed, on the one hand, at increasing the intensity of agricultural work, and, on the other, at freeing labour power for industrial production. When the peasant-policy finally abolished the forced labour of agricultural workers it did not abolish work but increased its opportunities. The effect is quite different when modern social policy “regulates” working time by restricting the working day to ten, nine, and eight hours a day, or, as in various categories of public officials, to six hours or even less. For this reduces the amount of work done and thus the yield of production.
The effect of such measures for the limitation of labour have been too obvious to be overlooked. This is why all efforts to extend the legal protection of labour in calling for a radical reconstruction of conditions of work have encountered strong resistance. Etatist writers generally talk as though the general shortening of working time, the gradual elimination of women’s and children’s labour, and the limitation of night work were to be ascribed exclusively to legislative intervention and the activity of trade unions.7 This attitude shows that they are still influenced by the views on the character of industrial wage labour held in circles unsympathetic to modern capitalist industry. According to these views factory industry has a peculiar aversion to using fully trained labour. It is supposed to prefer the unskilled labourer, the weak woman, and the frail child to the all-round trained expert. For on the one hand it wishes to produce only inferior mass commodities, in the manufacture of which it has no use for the skilled employee; on the other, the simplicity of the movements involved in mechanical production enables industry to employ the undeveloped and the physically weak. As the factories are supposed to be profitable only if they under-pay the workers, it is natural that they should employ unskilled workers, women, and children and try to extend the working day as much as possible. It is supposed that this view can be substantiated by referring to the evolution of large scale industry. But in its beginnings large scale industry had to be content with such labour because at that time it could only employ labour outside the guild organization of handicrafts. It had to take the untrained women and children because they were the only ones available, and was forced to arrange its processes so as to manage with inferior labour. Wages paid in the factories were lower than the earnings of handicraft workers because the labour yield was lower. For the same reason the working-day was longer than in the handicrafts. Only when in time these conditions changed, could large scale industry change the conditions of its labour. The factory had no other alternative than to employ women and children in the beginning, fully trained workers not being available; but when, by competition, it had vanquished the older labour systems and had attracted to itself all the workers there employed, it altered its processes so that skilled male workers became the main labour factor and women and children were forced more and more out of industry. Wages rose, because the production of the efficient worker was higher than the production of the factory girl or child. The worker’s family found that the wife and children did not need to earn. Working hours lessened because the more intensive labour of the efficient worker made possible a better exploitation of the machinery than could be achived with the sluggish and unskilled work of inferior labour.8
The shorter working day and the limitation of woman and child labour, in so far as these improvements were in operation in Germany about the outbreak of the War, were by no means a victory won by the champions of the legal protection of labour from selfish entrepreneurs. They were the result of an evolution in large scale industry which, being no longer compelled to seek its workers on the fringe of economic life, had to transform its working conditions to suit the better quality of labour. On the whole, legislation has only anticipated changes which were maturing, or simply sanctioned those that had already taken place. Certainly it has always tried to go further than the development of industry allowed, but it has not been able to maintain the struggle. It has been obstructed, not so much by the resistance of entrepreneurs, as by the resistance of the workers themselves, a resistance not the less effective for being unvocal and little advertised. For the workers themselves had to pay for every protective regulation, directly as well as indirectly. A restriction on female and child labour burdened the workers’ budget just as much as a limitation of employment in adult labour. The reduction in the supply of labour achieved by such measures does indeed raise the marginal productivity of labour and thus the wage rate corresponding to one unit of production. Whether this rise is sufficient to compensate the worker for the burden of rising commodity prices is questionable. One would have to examine the data of each individual example before forming any conclusions about this. It is probable that the decline of production cannot bring an absolute rise of real income to the worker. But we need not go into this in detail. For one could only speak of a considerable reduction in the supply of labour, brought about by labour laws, if these laws were valid beyond a single country. As long as this was not so, as long as every state proceeded on its own lines, and those countries, whose recently developed industry took every opportunity to supplant the industry of the older industrial states, were backward in promulgating labour-protection, then the worker’s position in the market could not be improved by labour protection. Efforts to generalize labour protection by international treaties were intended to remedy this. But of international labour protection, even more truly than of the national movement, one may say that the process has not gone beyond the stage which would have been reached in the normal evolution of industry.
This attitude of destructionism emerges more clearly from the theory than from the execution of labour protection, for the danger to industrial development implied in the regulations has to a certain extent limited attempts to carry theory into practice. That the theory of the exploitation of wage earners has spread and been so rapidly accepted is due above all to destructionism, which has not hesitated to use a technique for describing industrial working conditions which can only be called emotional. The popular figures, the hard-hearted entrepreneur and the grasping capitalist on the one side, and the noble poor, the exploited worker on the other side, have, so to speak, been introduced into the presuppositions of the legal system. Legislators have been taught to see in every frustration of the plans of an entrepreneur a victory of public welfare over the selfish interests of parasitic individuals. The worker has been taught to believe that he is toiling thanklessly for the profit of capital, and that it is his duty to his class and to history to perform his work as sluggishly as possible.
The theory of wages assumed by the advocates of legal labour protection has many defects. They treat Senior’s arguments against the legal regulation of working hours with contempt, but they produce nothing relevant in refutation of the conclusions he reaches on the assumption of stationary conditions. The inability of the “Socialists of the Chair” (“Kathedersozialist”) school to understand economic problems is particularly evident in Brentano. The idea that wages correspond to the efficiency of labour is so far beyond his comprehension that he actually formulates a “law” that a high wage increases the product of labour, whilst a low wage reduces it, although nothing could be more clear than the fact that good work is paid for at a higher rate than bad.9 This mistake is again obvious when he goes on to say that the shortening of working hours is a cause and not a result of greater efficiency of labour.
Marx and Engels, the fathers of German Socialism, well understood how fundamentally important to the spread of destructionist ideas was the fight for labour legislation. The “Inaugural Address of the International Association of Workers” says that the English ten-hour day was “not only a great practical success; it was the victory of a principle. For the first time the political economy of the bourgeoisie was openly vanquished by the political economy of the working class.”10 Over twenty years before, Engels had made an even more candid admission of the destructionist nature of the Ten Hour Day Bill. He could not help admitting that the counter-arguments of the entrepreneurs were half true. The Bill would, he thought, depress wages and make English industry unable to compete. But this did not alarm him. “Naturally,” he added, “were the Ten Hour Day Bill a final measure, England would be ruined, but because it necessarily involves the passing of subsequent measures, which must lead England into a path quite different from that she has travelled up till now, it will mean progress.”11 If English industry were to succumb to foreign competition the revolution would be unavoidable.12 In a later essay he said of the Ten Hour Day Bill: “It is no longer an isolated attempt to lame industrial development. It is one link in a long chain of measures which will transform the whole present form of society and gradually destroy the former class conflicts. It is not a reactionary but a revolutionary measure.”13
The fundamental importance of the fight for labour legislation cannot be overestimated. But Marx and Engels and their liberal opponents both over-estimated the immediate destructive effects of the particular measures. Destructionism advanced on other fronts.
Compulsory Social Insurance
The essence of the programme of German etatism is social insurance. But people outside the German Empire have also come to look upon social insurance as the highest point to which the insight of the statesman and political wisdom can attain. If some praise the wonderful results of these institutions, others can only reproach them for not going far enough, for not including all classes and for not giving the favoured all that, in their opinion, they should have. Social insurance, it was said, ultimately aimed at giving every citizen adequate care and the best medical treatment in sickness and adequate sustenance if he should become incapable of work through accident, sickness or old age, or if he should fail to find work on conditions he considered necessary.
No ordered community has callously allowed the poor and incapacitated to starve. There has always been some sort of institution designed to save from destitution people unable to sustain themselves. As general well-being has increased hand in hand with the development of Capitalism, so too has the relief of the poor improved. Simultaneously the legal basis of this relief has changed. What was formerly a charity on which the poor had no claim is now a duty of the community. Arrangements are made to ensure the support of the poor. But at first people took care not to give the individual poor a legally enforceable claim to support or sustenance. In the same way they did not at once think of removing the slight stigma attaching to all who were thus maintained by the community. This was not callousness. The discussions which grew out of the English Poor Law in particular show that people were fully conscious of the great social dangers involved in every extension of poor relief.
German social insurance and the corresponding institutions of other states are constructed on a very different basis. Maintenance is a claim which the person entitled to it can enforce at law. The claimant suffers no slur on his social standing. He is a State pensioner like the king or his ministers or the receiver of an insurance annuity, like anyone else who has entered into an insurance contract. There is also no doubt that he is entitled to look on what he receives as the equivalent of his own contributions. For the insurance contributions are always at the expense of wages, immaterial of whether they are collected from the entrepreneur or from the workers. What the entrepreneur has to pay for the insurance is a charge on labour’s marginal productivity, it thus tends to reduce the wages of labour. When the costs of maintenance are provided out of taxes the worker clearly contributes towards them, directly or indirectly.
To the intellectual champions of social insurance, and to the politicians and statesmen who enacted it, illness and health appeared as two conditions of the human body sharply separated from each other and always recognizable without difficulty or doubt. Any doctor could diagnose the characteristics of “health.” “Illness” was a bodily phenomenon which showed itself independently of human will, and was not susceptible to influence by will. There were people who for some reason or other simulated illness, but a doctor could expose the pretence. Only the healthy person was fully efficient. The efficiency of the sick person was lowered according to the gravity and nature of his illness, and the doctor was able, by means of objectively ascertainable physiological tests, to indicate the degree of the reduction of efficiency.
Now every statement in this theory is false. There is no clearly defined frontier between health and illness. Being ill is not a phenomenon independent of conscious will and of psychic forces working in the subconscious. A man’s efficiency is not merely the result of his physical condition; it depends largely on his mind and will. Thus the whole idea of being able to separate, by medical examination, the unfit from the fit and from the malingerers, and those able to work from those unable to work, proves to be untenable. Those who believed that accident and health insurance could be based on completely effective means of ascertaining illnesses and injuries and their consequences were very much mistaken. The destructionist aspect of accident and health insurance lies above all in the fact that such institutions promote accidents and illness, hinder recovery, and very often create, or at any rate intensify and lengthen, the functional disorders which follow illness or accident.
A special disease, traumatic neurosis, which had already appeared in some cases as a result of the legal regulation of claims for compensation for injury, has been thus turned into a national disease by compulsory social insurance. No one any longer denies that traumatic neurosis is a result of social legislation. Overwhelming statistics show that insured persons take much longer time to recover from their injuries than other persons, and that they are liable to more extensions and permanent functional disturbances than those of the uninsured. Insurance against diseases breeds disease. Individual observation by doctors as well as statistics prove that recovery from illnesses and injuries is much slower in officials and permanent employees and people compulsorily insured than in members of the professions and those not insured. The desire and the necessity of becoming well again and ready for work as soon as possible assist recuperation to a degree so great as to be capable of demonstration.14
To feel healthy is quite different from being healthy in the medical sense, and a man’s ability to work is largely independent of the physiologically ascertainable and measurable performances of his individual organs. The man who does not want to be healthy is not merely a malingerer. He is a sick person. If the will to be well and efficient is weakened, illness and inability to work is caused. By weakening or completely destroying the will to be well and able to work, social insurance creates illness and inability to work; it produces the habit of complaining—which is in itself a neurosis—and neuroses of other kinds. In short, it is an institution which tends to encourage disease, not to say accidents, and to intensify considerably the physical and psychic results of accidents and illnesses. As a social institution it makes a people sick bodily and mentally or at least helps to multiply, lengthen, and intensify disease.
The psychic forces which are active in every living thing, including man, in the form of a will to health and a desire to work, are not independent of social surroundings. Certain circumstances strengthen them; others weaken them. The social environment of an African tribe living by hunting is decidedly calculated to stimulate these forces. The same is true of the quite different environment of the citizens of a capitalist society, based on division of labour and on private property. On the other hand a social order weakens these forces when it promises that if the individual’s work is hindered by illness or the effects of a trauma he shall live without work or with little work and suffer no very noticeable reduction in his income. Matters are not so simple as they appear to the naive pathology of the army or prison doctor.
Social insurance has thus made the neurosis of the insured a dangerous public disease. Should the institution be extended and developed the disease will spread. No reform can be of any assistance. We cannot weaken or destroy the will to health without producing illness.
The fundamental problem for the appreciation of the economic and social consequences of the trade unionism is the question whether labour can succeed, within a market economy, by association and by collective bargaining, in getting high wages lastingly and for all workers. To this question, economic theory—both the classic (including its Marxist wing), and the modern (including its socialist wing too)—answers categorically in the negative. Public opinion believes that the facts have proved the efficiency of trade unionism to improve the conditions of labour, because the standard of living of the masses has been steadily rising in the last hundred years. But economists explain this fact in an absolutely different way. According to them, this improvement is due to the progress of capitalism, to the progressive accumulation of capital and to its corollary, the increase of the marginal productivity of labour. And there is no doubt that we must give more credit to the views of the economists, substantiated as they are by the actual course of events, than to the naive belief of men who simply argue post hoc ergo propter hoc (after this, therefore, because of it). It is true that this fundamental point has been entirely misunderstood by many thousands of worthy labour leaders, who have devoted their life work to the organization of trade unions, and by many eminent philanthropists who have advocated trade unionism as the cornerstone of future society. It was the true tragedy of the age of capitalism that this attitude was wrong and that trade unionism developed into the most important weapon of destructionist policy. Socialist ideology has so successfully obscured the nature and peculiarity of the trade union that nowadays it is difficult to envisage what trade unions are and what they do. People are still inclined to treat the problem of workers’ associations as if it were a question of the freedom to combine and the right to strike. But there has been no question for decades now of whether the workers shall be granted liberty to form associations or whether they shall have the right to cease work, even in violation of a labour contract. No legislation denies them this right, for the legal damages which might devolve upon individual workers for stopping work in breach of contract have no importance in practice. Thus even the most extreme advocates of destructionism have hardly bothered to claim for the worker the right to break contractual obligations at will. When in recent years some countries, and among them Great Britain, the cradle of modern trade unionism, tried to limit the power of trade union policy, it was not part of their purpose to do away with what they considered the non-political action of trade unionism. The Act of 1927 attempted to outlaw general strikes and sympathetic strikes, but did not in any way interfere either with the freedom of association or with the strike for the sake of obtaining better rates of pay.
The general strike has always been considered, both by its supporters and by its opponents, as a revolutionary measure, or even as the essence of revolution itself. The vital element in the general strike is the more or less complete paralysis of the economic life of the community in order to bring about certain desired ends. How successful a general strike can be was proved when the Kapp Putsch,15 supported both by the German legal army and by a great illegal armed force which had compelled the Government to flee from the capital, was defeated in a few days by the general strike. In this case the weapon of the general strike was used to defend democracy. But whether one finds the political attitude of organized labour sympathetic or not, is of no consequence. The fact is that in a country where trade unionism is strong enough to set in motion a general strike, the supreme power is in the hands of trade unions and not in the hands of parliament and the government dependent on it. It was the comprehension of the real meaning of trade unionism and its working which inspired the French Syndicalists with their basic idea that violence is the means which political parties must use if they want to come to power. It should never be forgotten that the philosophy of violence, which replaced the conciliatory teaching of liberalism and democracy, started as a philosophy of trade unionism. Syndicalism is nothing else but the French word for trade unionism. The glorification of violence which characterizes the policy of Russian Sovietism, of Italian Fascism and of German Nazism, and which today seriously threatens all democratic governments, sprang from the teachings of revolutionary syndicalists. The essence of the trade union problem is the compulsion to coalesce and to strike. The unions claim the right to force out of employment all those who refuse to combine with them or those to whom they have refused membership. They claim the right to stop work at will, and to prevent anyone from taking the place of the strikers. They claim the right to prevent and punish by violence the contravention of their decisions, and to take all steps to organize this violent action so that its success shall be assured.
Every association becomes more cumbrous and prudent when the men at its head have grown old. Fighting associations lose the desire to attack and the ability to overcome their opponents by swift action. The armies of military powers, above all the armies of Austria and Prussia have learned over and over again that victory is difficult under old leaders. The Unions are no exception to the rule. So it may come about that some of the older and fully developed trade unions have temporarily lost some of their destructionist lust for attack and readiness for battle. Thus when the aged resist the destructive policy of impetuous youth, an instrument of destruction becomes for the moment an instrument which supports the status quo. It is just on this ground that the radicals have continually reproached the trade unions, and it is just this plea which the trade unions have themselves put forward when they have wanted help from the nonsocialist classes of the community in their work of extending compulsory unionism. These pauses for breath in the trade unions’ destructive fights have always been short. Over and over again those who triumphed were those who advocated an uninterrupted continuation of the fight against the capitalist social order. The violent elements have either pushed out the old trade union leaders or erected new organizations in the place of the old. It could not be otherwise. For, consistently with the idea on which they have developed, the associations of workers in trade unions are only imaginable as a weapon of destruction. We have shown that the solidarity of the members of the trade union can be founded only on the idea of a war to destroy the social order based on private ownership in the means of production. The basic idea and not merely the practice of the trades unions is destructionist.
The cornerstone of trade unionism is compulsory membership. The workers refuse to work with men who belong to an organization not recognized by themselves. They exclude the non-union men by threatening to strike or, ultimately, by striking. Those who refuse to join the union are sometimes compelled to do so by rough handling. It is not necessary to dilate upon the drastic violation of the liberty of the individual which this implies. Even the sophistries of advocates of trade union destructionism have not succeeded in reassuring public opinion on this point. When from time to time specially gross examples of violence against a non-union worker get publicity, even those newspapers which otherwise stand more or less on the side of the destructionist parties are moved to protest.
The weapon of the trade union is the strike. It must be borne in mind that every strike is an act of coercion, a form of extortion, a measure of violence directed against all who might act in opposition to the strikers’ intentions. For the purpose of the strike would be defeated if the entrepreneur were able to employ others to do the work of the strikers, or if only a section of the workers joined the strike. The long and the short of trade union rights is in fact the right to proceed against the strike-breaker with primitive violence, and this right the workers have successfully maintained. How this right was established by the trade unions in various countries does not concern us here. It is sufficient to say that in the last decades it has been established everywhere, less by explicit legislative sanction than by the tacit toleration of public authority and the law. For years it has hardly been possible to break a strike in any part of Europe by employing strike-breakers. For a long time it was at least possible to avoid strikes on railways, lighting and water services, and the most important urban food supply enterprises. But here, too, destructionism has at last carried the day.
No one has seriously contested the destructionist function of trade unionism. There has never yet been a wage-theory from which one could deduce that association by means of trade unions led to a permanent increase in the real income of the workers. Certainly Marx was far from allowing that trade unions had any effect on wages. In a speech made in 1865 before the General Council of the “International”16 Marx tried to win over his comrades to joint action with the trade unions. His introductory words reveal his object in doing so. The view that increase of wages could not be obtained by strikes—a view represented in France by the Proudhonists, in Germany by the Lassallians—was, he said, “most unpopular with the working class.” But his great qualities as a tactitian, which a year before had enabled him in his “Inaugural Address” to weld into one unitary programme the most diverse opinions upon the nature, aims, and tasks of the labour movement, were now again brought into play, and as he was anxious to link up the trade union movement with the International, he produced everything that can be said in favour of trade unions. Nevertheless he is careful not to commit himself to a statement that the workers’ economic position could be directly improved through the trade unions. As he sees it, the foremost task of the trade unions is to lead the fight against Capitalism. The position he assigns to trade unions admits of no doubt as to the results he expects from their intervention. “In place of the conservative motto: ’A just day’s wage for a just day’s work’ they ought to print on their banners, ’Abolition of the wage system’—They generally miss their aim because they limit themselves to carrying on a guerilla war against the consequences of the present system, instead of working at the same time for its transformation and employing their organized power as a lever for the final emancipation of the working classes; that is, for the final abolition of the wage system.”17 Marx could hardly have said more plainly that he could see nothing more in the trade unions than tools for the destruction of the capitalist social order. It remained for the “realistic” economists and revisionist Marxians to assert that the trade unions were able to maintain wages permanently above the level at which they would have stood without trade unionism. There is no need to argue the point, for no attempt was made even to develop a theory from it. It remains an assertion which is always made without any reference to the interdependence of economic factors and without any sort of proof.
The policy of strike, violence, and sabotage can claim no merit whatever for any improvement in the workers’ position.18 It has helped to shake to the foundations the skillfully constructed edifice of the capitalist economy, in which the lot of everyone down to the poorest worker has been continually rising. And it has operated not in the interests of Socialism but in that of Syndicalism.
If workers in the so-called non-vital industries succeed in their demand for wages above the level given by the situation on the market, there ensues a dislocation which sets in motion forces that lead finally to a readjustment of the market’s disturbed equilibrium. If, however, the workers in vital industries are able to enforce by strikes or threat of strikes their demands for higher wages, and to claim all those rights claimed in the wage struggle by other workers, the position is altogether different. It would be misleading to say that those workers were then virtually monopolists, for the question here lies outside the concept of economic monopoly. If the employees of all transport undertakings strike and circumvent action which might weaken the intended effect of their strike, they are absolute tyrants of the territories under their dominion. One may say, of course, that they make a sober use of their power, but this does not alter the fact that they have the power. That being so, there are only two classes in the country: members of the trade unions for the branches of production essential to life, and the remainder of the people, who are slaves without rights. We arrive at a position where “the indispensable workers dominate the remaining classes by the rule of violence.”19
And, speaking once again of power it may be well to inquire at this point on what this power, in common with all other power, is based. The power of the workers organized in trade unions, before which the world now trembles, has precisely the same foundations as the power of any other tyrants at any time; it is nothing more than the product of human ideologies. For decades it was impressed upon people that the association of workers in trade unions was necessary and useful to the individual as well as to the community, that only the wicked selfishness of exploiters could think of combating the unions, that in strikes the strikers were always right, that there could hardly be a worse infamy than strike-breaking, and that attempts to protect those willing to work were anti-social. The generations which grew up in the last decades have been taught from childhood that membership in a trade union was a worker’s most important social duty. A strike came to mean a sort of holy action, a social ordinance. On this ideology rests the power of the workers’ association. It would break down if the theory of its social utility were superseded by other views on the effects of trade unionism. Plainly, therefore, it is precisely the most powerful unions which are obliged to use their power sparingly, since, by putting an undue strain on society, they might cause people to reflect upon the nature and effect of trade unionism and so lead to a re-examination and rejection of these theories. This, of course, is and always has been true of all holders of power and is no peculiarity of the trade unions.
For this surely is clear: that should there ever be a thorough discussion of the right of the workers in vital industries to strike, the whole theory of trade unionism and compulsory strikes would soon collapse and such strike-breaking associations as the “Technische Nothilfe”20 would receive the applause which today goes to the strikers. It is possible that in the ensuing conflict society would be destroyed. On the other hand, it is certain that a society which aims at preserving trade unionism on its present lines is in a fair way towards destroying itself.
Assistance of the unemployed has proved to be one of the most effective weapons of destructionism.
The reasoning which brought about unemployment insurance was the same as that which led to the setting up of insurance against sickness and accident. Unemployment was held to be a misfortune which overwhelmed men like an avalanche. It occurred to no one that lack of wages would be a better term than lack of employment, for what the unemployed person misses is not work but the remuneration of work. The point was not that the “unemployed” could not find work, but that they were not willing to work at the wages they could get in the labour market for the particular work they were able and willing to perform.
The value of health and accident insurance becomes problematic by reason of the possibility that the insured person may himself bring about, or at least intensify, the condition insured against. But in the case of unemployment insurance, the condition insured against can never develop unless the insured persons so will. If they did not act as trade unionists, but reduced their demands and changed their locations and occupations according to the requirements of the labour market, they could eventually find work. For as long as we live in the real world and not in the Land of Heart’s Desire, labour will be a scarce good, that is, there will be an unsatisfied demand for labour. Unemployment is a problem of wages, not of work. It is just as impossible to insure against unemployment as it would be to insure against, say, the unsaleability of commodities.
Unemployment insurance is definitely a misnomer. There can never be any statistical foundation for such an insurance. Most countries have acknowledged this by dropping the name “insurance,” or at least by ignoring its implications. It has now become undisguised “assistance.” It enables the trade unions to keep wages up to a rate at which only a part of those seeking work can be employed. Therefore, the assistance of the unemployed is what first creates unemployment as a permanent phenomenon. At present many European states are devoting to the purpose sums that considerably exceed the capacity of their public finances.
The fact that there exists in almost every country permanent mass unemployment is considered by public opinion as conclusive proof that Capitalism is incapable of solving the economic problem, and that therefore government interference, totalitarian planning and Socialism are necessary. And this argument is regarded as irrefutable when people realize that the only big country which does not suffer from the evils of unemployment is communist Russia. The logic of this argument however, is very weak. Unemployment in the capitalist countries is due to the fact that the policy both of the governments and of the trade unions aims at maintaining a level of wages which is out of harmony with the existing productivity of labour. It is true that as far as we can see there is no large scale unemployment in Russia. But the standard of living of the Russian worker is much lower than the standard of living of the unemployed dole receiver in the capitalist countries of the West. If the British or Continental workers were ready to accept wages which would indeed be lower than their present wages but which would still be several times higher than the wages of the Russian worker, unemployment would disappear in these countries too. Unemployment in the capitalist countries is not a proof of the insufficiency of the capitalist system, nor is the absence of unemployment in Russia a proof of the efficiency of the communist system. But the fact that there is unemployment as a mass phenomenon in almost every capitalist country is nevertheless the most formidable menace to the continuance of the capitalist system. Permanent mass unemployment destroys the moral foundations of the social order. The young people, who, having finished their training for work, are forced to remain idle, are the ferment out of which the most radical political movements are formed. In their ranks the soldiers of the coming revolutions are recruited.
This indeed is the tragedy of our situation. The friends of trade unionism and of the policy of unemployment doles honestly believe that there is no way to ensure the maintenance of fair conditions of life for the masses other than the policy of the trade unions. They do not see that in the long run all efforts to raise wages above a level corresponding to the market reflection of the marginal productivity of the labour concerned must lead to unemployment, and that in the long run unemployment doles can have no other effect than the perpetuation of unemployment. They do not see that the remedies which they recommend for the relief of the victims—doles and public works—lead to consumption of capital, and that finally capital consumption necessitates a lowering of the wage level still further. Under present conditions it is clear that it would not be feasible to abolish the dole and the other less important provisions for the relief of the unemployed, public works and so on, at one single stroke. It is indeed one of the principal drawbacks of every kind of interventionism that it is so difficult to reverse the process—that its abolition gives rise to problems which it is almost impossible to solve in a completely satisfactory way. At the present day the great problem of statesmanship is how to find a way out of this labyrinth of interventionist measures. For what has been done in recent years has been nothing else than a series of attempts to conceal the effects of an economic policy which has lowered the productivity of labour. What is now needed is first of all a return to a policy which ensures the higher productivity of labour. This includes clearly the abandonment of the whole policy of protectionism, import duties and quotas. It is necessary to restore to labour the possibility to move freely from industry to industry and from country to country.
It is not Capitalism which is responsible for the evils of permanent mass unemployment, but the policy which paralyses its working.
Under Liberalism, state-owned factories and production by the State were abolished. The postal service was practically the only exception to the general principle that the means of production should be left to private ownership and every economic activity made over to the private citizen. The advocates of etatism have gone to a lot of trouble to set forth the reasons which they suppose to favour the nationalization of the postal and the related telegraph service. In the first place they put forward political arguments. But in such discussions of the pros and cons of state control of the post and telegraph system, two things are generally lumped together which ought to be considered separately: the questions of unifying the service and of transferring it exclusively to the State. No one denies that the post and telegraph systems afford excellent facilities for unification, and that, even if they were left perfectly free, trusts would inevitably be formed, leading to a de facto monopoly of individuals over whole territories at least. With no other enterprises are the advantages of concentration more obvious. But to admit this is not by any means to decide whether the State is to be granted a legally assured monopoly for all branches of such services. It could easily be demonstrated that State management works uneconomically, that it is slow to extend the facilities for the transmission of letters and parcels in accordance with business requirements, and that it can only with difficulty be persuaded to introduce practical improvements. The great progress in this sphere of economic life has been achieved by private enterprise. We owe largely to private enterprise the development on a large scale of overland telegraphy: in England this was nationalized only in 1869, in the U.S.A. it is still in the hands of joint stock companies. Submarine cables are mostly in the hands of private enterprise. Even German etatism showed hesitation in “freeing” the State from collaboration with private enterprise in deep sea telegraphy. The liberals of that time also advocated the principle of full freedom in post and telegraph services and attempted with great success to expose the inadequacy of State enterprise.21 That nevertheless these branches of production have not been denationalized is to be ascribed only to the fact that those holding political power need the post and telegraph to control public opinion.
The military powers, everywhere ready to hinder the entrepreneur, have acknowledged his superiority by handing over to him the production of arms and munitions. The great advances in war technique date from the moment when private enterprise began to produce war material. The State has had to recognize that the entrepreneur produces better arms than the civil servant; this was proved on the battlefields in a way that enlightened even the most stubborn advocate of state production. In the nineteenth century arsenals and state shipyards disappeared almost completely, or were transformed into mere magazines, and their place was taken by private enterprises. Literary and parliamentary supporters of the nationalization of industry had scant success with their demand for the nationalization of the armaments industry, even in the most flourishing days of etatism in the years immediately preceding the World War. The general staffs knew well the superiority of the private undertaking.
For reasons of public finance, certain revenue monopolies which had existed from a distant past were not abolished even during the epoch of Liberalism. They remained because they were looked upon as a convenient way of collecting a tax on consumption. But people had no illusions about the uneconomic nature of state enterprise—in the administration of the tobacco monopolies, for example. But before Liberalism could carry its victorious principle into this field, Socialism had already introduced a retrograde movement.
The ideas from which sprang the first modern nationalizations and municipalizations were not altogether inspired by modern Socialism. In the origins of the movement, ideas of the old police state and purely military and political considerations played a great part. But soon the socialist ideology became dominant. It was a conscious socialization that was carried out by states and municipalities. The slogan was: away with uneconomic private enterprise, away with private ownership.
At first the economic inferiority of socialist production did not hinder the progress of nationalization and municipalization. The voice of caution was not heard. It was lost in the shouting of etatists, socialists, and all the elements whose interests were at stake. People did not choose to see the faults of government enterprise, and so overlooked them. Only one circumstance restricted the excessive zeal of the enemies of private property—the financial difficulties with which a large number of public undertakings had to contend. For political reasons the government could not completely pass on to consumers the higher costs of State management, and working losses were therefore frequent. Its supporters consoled themselves by stating that the general economic and social political advantages of state and municipal enterprise were well worth the sacrifice. All the same, it became necessary to proceed cautiously with the etatistic policy. The embarrassment in which economists writing on these problems found themselves became evident from their reluctance to ascribe the financial failure of public enterprises to the uneconomic methods of this kind of enterprise. They tried instead to account for it by some special circumstance, such as personal mistakes in the management and errors in organization. And they pointed repeatedly to the Prussian State railways as the most brilliant model of a good administration. Of course the Prussian State railways have yielded good working surpluses. But there were special reasons. Prussia acquired the most important part of its State railway system in the first half of the ’eighties, that was at a time of specially low prices, and the whole system was equipped and expanded to a large extent before the rapid growth of German industrial prosperity which set in during the second half of the ’nineties. Thus there was nothing particularly remarkable in the fact that these railways paid well, for their loads grew from year to year without any solicitation, they ran mostly through plains, they had coal on every hand, and could count on favourable running conditions. Their situation was such that they could yield profits for a while although run by the State. It was the same with the gas, water, and electricity works and with the tramway systems of several large cities. The conclusions generally drawn from this were, however, far from accurate.
Generally speaking, the result of nationalization and municipalization was that taxation had to contribute to running costs. So it may be said that no catchword has ever been made public at so inappropriate a moment as Goldscheid’s slogan of “the suppression of the taxation state.” Goldscheid thinks that the financial troubles into which the World War and its consequences have landed the State can no longer be remedied by the old methods of public finance. The taxation of private enterprise is failing. Therefore, one must start to “repropriate” the State by expropriating capitalist enterprises, so that the State will be able to cover its expenses out of the profits of its own undertakings.22 Here we have the cart before the horse. The financial difficulties result from the fact that taxation can no longer pay the large contributions required by socialist enterprises. Were all enterprises socialized, the form of the evil would indeed be changed, but far from being abolished it would be intensified. The smaller yield of the public enterprises would no longer be visible in a budget deficit, it is true, but the population would be worse off. Distress and misery would increase, not diminish. To remove the State’s financial troubles Goldscheid proposes to carry socialization to the bitter end. But this financial trouble has come about because socialization has already gone too far. It will vanish only when socialized enterprises are returned to private ownership. Socialism has arrived at a point where the impossibility of carrying out its technique is apparent to all, where even the blind begin to see that it is hastening the decline of all civilization. The effort made in Central Europe to socialize completely at a single stroke was wrecked not by the resistance of the bourgeoisie, but by the fact that further socialization was quite impossible from a financial point of view. The systematic, cool and deliberate socialization practised by states and municipalities up to the war, came to a standstill because the result to which it was leading became all too clear. The attempt to pass it off under a different name, as the socialization commission in Germany and Austria tried to do, could have no success in these circumstances. If the work of socialization had to be carried on, it was not possible to do so by the old methods. The voice of reason which warned men not to venture any further on this path must be silenced, criticism must be obliterated by the intoxication of enthusiasm and fanaticism, opponents must be killed, as there was no other way of refuting them. Bolshevism and Spartacism were the last weapons of Socialism. In this sense they are the inevitable outcome of the policy of destructionism.
For classical nineteenth-century Liberalism, which assigns to the State the sole task of safeguarding the citizen’s property and person, the problem of raising the means needed for public services is a matter of small importance. The expenditure caused by the apparatus of a liberal community is so small, compared with the total national income, that there is little appreciable difference between meeting it one way or another. If the liberal writers of that period have been concerned to find the best form of taxation, they have done so because they wish to arrange every detail of the social system in the most effective way, not because they think that public finance is one of the main problems of society. They have of course to take into account the fact that nowhere in the world have their ideas been realized, and that the hope of seeing them completely realized in the near future is slender. They see clear evidence of liberal development everywhere, they believe that the distant future belongs to Liberalism; but the forces of the past still seem sufficiently strong to inhibit its progress, though no longer strong enough to stop it completely, let alone suppress it. There still exist schemes for violence and conquest, there are standing armies, secret diplomatic treaties, wars, tariffs, State interference in trade and industry—in short, interventionism of every kind in home and foreign policy. So, for a considerable time to come, the nations must be prepared to allow considerable sums for governmental expenditure. Though questions of taxation would be of minor importance in the purely liberal state, they call for increased attention in the authoritarian state in which liberal politicians of their time have to work. In the first place,therefore, they recommend that State expenditure shall be restricted. But if they do not completely succeed in this they must decide how the necessary funds are to be raised without more harm than is absolutely necessary.
Liberal taxation proposals must necessarily be misunderstood unless it is realized that liberal politicians look on every tax as an evil—though up to a point an unavoidable one—and that they proceed from the supposition that one must try to keep State expenditure down to a minimum. When they recommend a certain tax, or, to speak more correctly, call it less harmful than other taxes, they always have in mind the raising of only a relatively small sum. A low rate of taxation is an integral part of all liberal programmes of taxation. This alone explains their attitude towards the income tax, which they were the first to introduce into serious discussions on public finance, and their willingness to agree that a modest minimum of subsistence shall be free from taxation and the rate of taxation on small incomes lowered.23
The socialist financial policy also is only a temporary one, its validity being limited to the period of transition. For the Socialist State, where all means of production belong to society and all income finds its way in the first place to the State coffers, questions of finance and taxation do not exist at all in the sense in which the social order based on private property has to deal with them. Those forms of the socialist community which, like State Socialism, intend to allow private property to continue in name and in outward form, would not really need to levy taxes either, although they might retain the name and legal form of taxation. They would simply decree how much of the social income obtained in the individual enterprises should remain with the nominal owner and how much should be handed over to the State. There would not be any question here of a taxation which imposes certain obstacles in individual businesses, but leaves the market to deal with its effect upon the prices of commodities and wages, on profits, interest, and rents. Questions of public finance and the policy of taxation exist only where there is private ownership in the means of production.
But for socialists, too, the public finance problems of capitalist society increase in importance as the period of transition becomes more and more prolonged. This is inevitable, seeing that they are continually trying to expand the area of the State’s tasks and that there is consequently an increase in expenditure. They thus take over the responsibility of increasing the income of the State. The socialist policy has become the decisive factor in the development of government expenditure, socialist demands regulate the policy of taxation and in the socialist programme itself public finance comes more and more into the foreground. Whilst in the liberal programme the basic principle is a low rate of taxation, the socialists think a tax is better the heavier it is.
Classical economics achieved much in the theory of the incidence of taxes. This must be admitted in spite of all the faults of its basic theory of value. When liberal politicians criticized existing conditions and proposed reforms they started from the masterly propositions of Ricardo’s admirable investigations on this subject. Socialist politicians have taken things much more easily. They had no new opinions of their own, and from the Classical writers they took merely what they needed for the politics of the moment—isolated remarks, torn from their context and dealing mainly with the incidence of taxes on consumption. They improvised a rough system which nowhere penetrated to the main problem, but had the virtue of being so simple that the masses could understand it. Taxes were to be paid by the rich, the entrepreneurs, the capitalists, in short, by “the others”; the workers, that is the electors whose votes were what mattered at the moment, should remain tax free. All taxes on mass consumption, even on alcoholic drinks, were to be rejected, because they burdened the people. Direct taxes could be as high as the government wished to make them, as long as the incomes and possessions of the workers were left alone. Not for one moment does it occur to the advocates of this popular taxation policy that direct taxes and taxes on trade may start a chain of events that will force down the standard of living of the very classes whose alleged special interests they claim to represent. Seldom does anyone ask whether the restriction of capital formation, which results from the taxation of property, may not harm the non-propertied members of society as well. More and more the policy of taxation evolves into a policy of confiscation. The aim on which it concentrates is to tax out of existence every kind of fortune and income from property, in which process property invested in trade and industry, in shares and bonds, is generally treated more ruthlessly than property in land. Taxation becomes the favourite weapon of interventionism. Taxation laws no longer aim exclusively or predominantly at increasing State revenues; they are intended to serve other purposes besides fiscal requirements. Sometimes their relation to public finance vanishes completely and they fulfil an entirely different function. Some taxes seem to be inflicted as punishment for behaviour that is considered injurious; the tax on big stores is intended to make it more difficult for big stores to compete with small shops; the taxes on stock exchange transactions are designed to restrict speculation. The dues become so numerous and varied that in making business transactions a man must first of all consider what the effect on his taxation will be. Innumerable economic projects lie fallow because the load of taxation would make them unprofitable. Thus in many states the high duties on founding, maintaining, amalgamating, and liquidating joint stock companies seriously restrict the development of the system.
Nothing is more calculated to make a demagogue popular than a constantly reiterated demand for heavy taxes on the rich. Capital levies and high income taxes on the larger incomes are extraordinarily popular with the masses, who do not have to pay them. The assessors and collectors go about their business with positive enthusiasm; they are intent upon increasing the taxpayer’s liability by the subtleties of legal interpretation.
The destructionist policy of taxation culminates in capital levies. Property is expropriated and then consumed. Capital is transformed into goods for use and for consumption. The effect of all this should be plain to see. Yet the whole popular theory of taxation today leads to the same result.
Confiscations of capital through the legal form of taxation are neither socialistic nor a means to Socialism. They lead, not to socialization of the means of production, but to consumption of capital. Only when they are set within a socialist system, which retains the name and form of private property, are they a part of Socialism. In “War Socialism” they supplemented the compulsory economic system and were instrumental in determining the evolution of the whole system towards Socialism.24 In a socialist system where the means of production are totally and formally socialized, there could in principle be no more taxes on property or income from property. When the socialist community levies dues from its members this in no way alters the disposal of the means of production.
Marx has spoken unfavourably of efforts to alter the social order by measures of taxation. He emphatically insisted that taxation reform alone could not replace Socialism.25 His views on the effect of taxes within the capitalist order were also different from those of the ordinary run of socialists. He said on one occasion, that to assert that “the income tax does not affect the workers” was “truly absurd.” “In our present social order, where entrepreneurs and workers stand opposed, the bourgeoisie generally compensates itself for higher taxation by reducing wages or raising prices.”26 But the Communist Manifesto had already demanded “a heavy progressive tax” and the Social Democratic Party’s demands in taxation have always been the most radical. In that field also, therefore, it is moving towards destructionism.
Inflation is the last word in destructionism. The Bolshevists, with their inimitable gift for rationalizing their resentments and interpreting defeats as victories, have represented their financial policy as an effort to abolish Capitalism by destroying the institution of money. But although inflation does indeed destroy Capitalism, it does not do away with private property. It effects great changes of fortune and income, it destroys the whole finely organized mechanism of production based on division of labour, it can cause a relapse into an economy without trade if the use of metal money or at least of barter trade is not maintained. But it cannot create anything, not even a socialist order of society.
By destroying the basis of reckoning values—the possibility of calculating with a general denominator of prices which, for short periods at least, does not fluctuate too wildly—inflation shakes the system of calculations in terms of money, the most important aid to economic action which thought has evolved. As long as it is kept within certain limits, inflation is an excellent psychological support of an economic policy which lives on the consumption of capital. In the usual, and indeed the only possible, kind of capitalist book-keeping, inflation creates an illusion of profit where in reality there are only losses. As people start off from the nominal sum of the erstwhile cost price, they allow too little for depreciation on fixed capital, and since they take into account the apparent increases in the value of circulating capital as if these increases were real increases of value, they show profits where accounts in a stable currency would reveal losses.27 This is certainly not a means of abolishing the effects of an evil etatistic policy, of war and revolution; it merely hides them from the eye of the multitude. People talk of profits, they think they are living in a period of economic progress, and finally they even applaud the wise policy which apparently makes everyone richer.
But the moment inflation passes a certain point the picture changes. It begins to promote destructionism, not merely indirectly by disguising the effects of destructionist policy; it becomes in itself one of the most important tools of destructionism. It leads everyone to consume his fortune; it discourages saving, and thereby prevents the formation of fresh capital. It encourages the confiscatory policy of taxation. The depreciation of money raises the monetary expression of commodity values and this, reacting on the book values of changes in capital—which the tax administration regards as increases in income and capital—becomes a new legal justification for confiscation of part of the owners’ fortune. References to the apparently high profits which entrepreneurs can be shown to be making, on a calculation assuming that the value of money remains stable, offers an excellent means of stimulating popular frenzy. In this way, one can easily represent all entrepreneurial activity as profiteering, swindling, and parasitism. And the chaos which follows, the money system collapsing under the avalanche of continuous issues of additional notes, gives a favourable opportunity for completing the work of destruction.
The destructionist policy of interventionism and Socialism has plunged the world into great misery. Politicians are helpless in the face of the crisis they have conjured up. They cannot recommend any way out except more inflation or, as they call it now, reflation. Economic life is to be “cranked up again” by new bank credits (that is, by additional “circulation” credit) as the moderates demand, or by the issue of fresh government paper money, which is the more radical programme.
But increases in the quantity of money and fiduciary media will not enrich the world or build up what destructionism has torn down. Expansion of credit does lead to a boom at first, it is true, but sooner or later this boom is bound to crash and bring about a new depression. Only apparent and temporary relief can be won by tricks of banking and currency. In the long run they must land the nation in profounder catastrophe. For the damage such methods inflict on national well-being is all the heavier, the longer people have managed to deceive themselves with the illusion of prosperity which the continuous creation of credit has conjured up.28
Marxism and Destructionism
Socialism has not consciously willed the destruction of society. It believed it was creating a higher form of society. But since a socialist society is not a possibility every step towards it must harm society.
It is the history of Marxian Socialism which shows most clearly that every socialist policy must turn into destructionism. Marxism described Capitalism as the inevitable preliminary to Socialism, and looked forward to the new society only as the result of Capitalism’s fruition. If we take our stand on this part of Marx’s theory—it is true that he has put forward other theories with which this is completely incompatible—then the policy of all the parties that claim Marx’s authority is quite non-Marxian. The Marxians ought to have combated everything that could in any way hinder the development of Capitalism. They should have protested against the trade unions and their methods, against laws protecting labour, against compulsory social insurance, against the taxation of property; they should have fought laws hindering the full working of the stock and produce exchanges, the fixation of prices, the policy which proceeds against cartels and trusts; they should have resisted inflationism. But they have done the reverse of all this, have been content to repeat Marx’s condemnation of the “petty bourgeois” policy, without however drawing the inevitable conclusions. The Marxians who, in the beginning, wished to dissociate themselves definitely from the policy of all parties looking to the pre-capitalist economic idea, arrived in the end at exactly the same point of view.
The fight between Marxists and the parties calling themselves emphatically anti-Marxists is carried on by both sides with such a violence of expression that one might easily be led into supposing them irreconcilable. But this is by no means the case. Both parties, Marxism and National Socialism, agree in opposing Liberalism and rejecting the capitalist social order. Both desire a socialist order of society. The only difference in their programme lies in slight variations in their respective pictures of the future socialist State; nonessential variations, as we could easily show. The foremost demands of the National Socialist agitation are different from those of the Marxists. While the Marxists speak of abolishing the commodity character of labour, the National Socialists speak of breaking the slavery of interest (Brechung der Zinsknechtschaft). While the Marxists hold the “capitalists” responsible for every evil, the National Socialists think to express themselves more concretely by shouting “Death to the Jews” (Juda verrecke).29
Marxism, National Socialism, and other anti-capitalist parties are indeed separated, not only by clique enmities, and personal resentments, but also by problems of metaphysics and the conduct of life. But they all agree on the decisive problem of reshaping the social order: they reject private ownership in the means of production and desire a socialist order of society. It is true that the paths by which they hope to reach the common goal run parallel only for short stretches, but even where they diverge they remain on adjacent territories.
It is not surprising that in spite of this close relationship they fight out their feud with consuming bitterness. In a socialist community the fate of the political minorities would necessarily become unbearable. How would National Socialists fare under a Bolshevist rule or Bolshevists under National Socialism?
The “Interest” as an Obstacle to Destructionism
According to Marx the political faith of the individual depends upon the class to which he belongs; the political faith of his class depends upon its interests as a class. The bourgeoisie is bound to support Capitalism. On the other hand the proletariat can only achieve its purpose, can only free itself from capitalist exploitation, by preparing the way for Socialism. Thus the respective positions of the bourgeoisie and the proletariat in the political arena are defined in advance. Perhaps no doctrine of Marx has made a deeper or more lasting impression on political theory than this. It has found acceptance far beyond the immediate range of Marxism. Liberalism has come to be regarded as the doctrine in which the class interests of the bourgeoisie and of big business find expression. Whoever professes liberal opinions is considered to be a more or less well-meaning representative of the special interests which stand in opposition to the general good. Economists who reject the Marxian doctrine are characterized as the “spiritual bodyguard of the profits of capital—and sometimes also of ground-rents”31 —a remarkably convenient theory which saves the Marxian the trouble of arguing with them.
Nothing indicates more clearly the widespread recognition which has been accorded to this doctrine of Marx than its acceptance even by the opponents of Socialism. When people suggest that the defeat of socialist effort is a task chiefly or even exclusively for the propertied classes, when they attempt to form a “united front” of all the bourgeois parties in order to oppose Socialism, they then admit that the maintenance of private property in the means of production is the special interest of a certain class, and that it is antagonistic to the public welfare. These strangely short-sighted adversaries of Socialism do not realize that any attempt on the part of a class, which is comparatively small when contrasted with the masses, to defend its particular interests must be futile; they do not recognize that private property is doomed when it is regarded as the privilege of its owners. Still less are they able to perceive that their assumption is radically contradicted by the experience of the formation of actual political parties.
Liberalism is not a doctrine which serves the class interests of those in possession of property. Whoever conceives it as such has already admitted one of the leading contentions of Socialism; he is no liberal. Liberalism upholds private property not in the interests of the owners, but in the general interest; it believes that the maintenance of the capitalist system is to the advantage not only of the capitalists but of every member of society. It admits that in the socialist community there will, in all probability, be little or no inequality of income. But it urges that owing to the smaller yield of socialist production, the total amount to be shared will be considerably smaller, so that each individual will receive less than the poorest receives today. Whether this thesis is accepted or rejected is another question. This is precisely the point upon which Socialism and Liberalism are in conflict. Whoever rejects it out of hand, rejects Liberalism. Yet it would be unreasonable to do this without careful consideration of the problem and of the arguments of either sides.
In fact nothing is further from the particular interests of the entrepreneurs, whether as individuals or as a class, than to defend the principle of private property or to resist the principle of Socialism. That the introduction of Socialism must necessarily injure the entrepreneurs and capitalists, or at least their children, cannot be disputed. by those who believe that Socialism implies want and distress for all. To this extent, therefore, the propertied classes are admittedly concerned in resisting Socialism. But their interest is no greater than that of any other member of society and is quite independent of their privileged position. If it were possible to imagine that Socialism would be introduced lock stock and barrel overnight, then it might be said that the entrepreneurs and capitalists had special reasons for wishing to maintain the capitalist system. They would have more to lose. Even if the distress which resulted from the reorganization were the same for all, those would suffer more whose fall had been the greater. But it is not possible to imagine that Socialism will be introduced so rapidly; and if it were, it may be assumed that the entrepreneurs, by reason of their expert knowledge and ability to take responsibility, would occupy, at any rate for a time, privileged positions within the socialist organization.
The entrepreneur is unable to provide for his grandchildren and great-grandchildren, for it is characteristic of private property in the means of production under the capitalist system that it creates no permanent source of income. Every fortune must be renewed by effort. When the feudal lord supported the feudal system he was defending not only his own property but that of his descendants. But the entrepreneur in the capitalist system knows that his children and grandchildren will only survive in the face of new competition if they can hold their ground as directors of productive enterprise. If he is concerned for the fate of his successors and wants to consolidate his property for them in a way contrary to the interests of the community, he will have to become an enemy of the capitalist social order and demand every kind of restriction on competition. Even the way to Socialism may strike him as the best means for this, provided the transition does not take place too suddenly, for he may expect compensation against expropriation so that, for a longer or shorter time, the expropriated will enjoy a secure income in place of the uncertainty and insecurity that is the lot of owners of an enterprise. Consideration for his own property and for the property of his successors may, therefore, urge the entrepreneurs rather to support than to oppose Socialism. He must welcome all efforts which aim at suppressing newly created and newly developed fortunes, especially all measures intended to limit anything in the nature of economic freedom, because they make secure the income which otherwise must be earned by daily struggle as long as competition is not restricted—because they exclude new competitors.32
Entrepreneurs have an interest in combining to proceed uniformly in wage negotiations with the workers organized in trade unions.33 And they have an interest in combining to carry through tariff and other restrictions which conflict with the essence and principle of Liberalism or to resist government interference which may injure them. But they have absolutely no special interest in fighting Socialism and socialization as such. They have no special interest in fighting destructionism. The whole purpose of the entrepreneur is to adjust himself to the economic contingencies of any moment. His aim is not to fight Socialism, but to adjust himself to conditions created by a policy directed towards socialization. It is not to be expected that entrepreneurs or any other particular group in the community should, out of self-interest, necessarily make the general principles of well-being the maxim of their own procedure. The necessities of life compel them to make the best of any given circumstances. It is not the business of the entrepreneurs to lead the political fight against Socialism; all that concerns them is to adjust themselves and their enterprises to the situations created by the measures directed towards socialization, so that they will make the greatest profit possible under the conditions prevailing.
It follows, therefore, that neither associations of entrepreneurs, nor those organizations in which the entrepreneurs’ support counts, are inclined to fight on principle against Socialism. The entrepreneur, the man who seizes the opportunity of the moment, has little interest in the issue of a secular struggle of indefinite duration. His interest is to adjust himself to the circumstances in which he finds himself at the moment. An entrepreneurs’ organization aims solely at repulsing some individual encroachment of the trade unions; or it may oppose acts of legislation, such as special forms of taxation. It carries out the tasks assigned to it by parliaments and governments in cases where it is desired that the organized body of entrepreneurs should co-operate with the organized working class in order to give the destructionist element its say in the national economy. To fight on principle for the maintenance of an economy based on private property in the means of production is no part of the programme of organized entrepreneurs. Its attitude towards Liberalism is one of indifference or even, as in the case of tariff policy, of antagonism.
Organized interests, as the socialist doctrine depicts them, correspond not to the entrepreneurs’ associations but to the farmers’ unions, which advocate tariff duties on agricultural products, or those associations of small producers, which—above all in Austria—press for the exclusion of competition. These clearly are not efforts on behalf of Liberalism.
Thus there are no individuals and no classes whose particular interests would lead them to support Capitalism as such. The policy of Liberalism is the policy of the common good, the policy of subjecting particular interests to the public welfare—a process that demands from the individual not so much a renunciation of his own interests as a perception of the harmony of all individual interests. There are, therefore, no individuals and no groups whose interests would ultimately be better guarded by Socialism than by a society based on private ownership in the means of production. But although ultimately no one’s interests would actually be better served by Socialism, there are plenty of people whose particular interests of the moment are better guarded by a policy directed towards socialization than by the maintenance of Liberalism. Liberalism has opposed everything in the nature of a sinecure and has sought to reduce to a minimum the number of public officials. The interventionist policy provides thousands and thousands of people with safe, placid, and not too strenuous jobs at the expense of the rest of society. All nationalization or setting up of a municipal or public enterprise links private interests with the movement against private property. Today Socialism and destructionism find their strongest supporters in the millions for whom a return to a freer economy would be at first and in the short run detrimental to their particular interests.
Violence and Authority
The attitude of mind which sees in private property a privilege of the owners is an echo from former periods in the history of property. All property ownership began with appropriation of ownerless things. The history of property passed through a period in which forcible dispossession of the owners was the rule. It is safe to say that the ownership of any piece of ground property can be traced back to seizure by violence. This has of course no application to the social order of Capitalism, as property here is constantly being acquired in the process of market competition. But as the liberal principles have nowhere—in Europe at least—been put into practice in their entirety, and as everywhere, especially in landed property, very much of the old taint of violence survives, the tradition of the feudal owners is still upheld: “Ich lieg und besitze” (I occupy and possess). Criticism of property rights is met with violent abuse. This is the policy the German Junkers adopted against Social Democracy—with what success is well known.34
Partisans of this order can say nothing in justification of private ownership in the means of production but that it is upheld by force. The fight of the strong is the only fight they can enforce. They boast of their physical force, rely on their armed equipment, and consider themselves entitled to despise any other argument. Only when the ground begins to tremble under their feet, do they produce another argument by taking their stand upon acquired rights. Violation of their property becomes an illegality which must be avoided. We need waste no words in exposing the weakness of this point of view in the struggle against a movement that wants to found new rights. It is quite powerless to change public opinion if that opinion has condemned property. Its beneficiaries recognize this with horror and turn in their distress to the Church, with the odd request that the Church shall keep the misera plebs (wretched masses) modest and humble, fight covetousness and turn the eyes of the propertyless from earthly goods to heavenly things.35 Christianity is to be kept alive so that the people shall not become covetous. But the demand thus made to the Church is monstrous. It is asked to serve the interests, generally assumed to be harmful to the community, of a number of privileged persons. It is obvious that the true servants of the Church have revolted against this presumptuous demand, while enemies of the Church have found it an effective weapon in their war of liberation against religion. What is surprising is that ecclesiastical enemies of Socialism, in their efforts to represent Socialism as a child of Liberalism, of the free school, and of atheism, have taken up just the same attitude towards the work which the Church performs in maintaining existing property relations. Thus the Jesuit Cathrein says: “If one assumes that with this life all is finished, that to man is given no greater destiny than to any other mammal that wallows in the mire, who then will ask of the poor and oppressed, whose life is a constant struggle for existence, that they should bear their hard fate with patience and resignation, and look on while others clothe themselves in silk and purple and have regular and ample meals? Does not the worker too carry in his heart the indestructible impulse towards perfect happiness? If he is robbed of every hope of a better world beyond, by what right is he prevented from seeking his happiness as far as possible on earth and so demanding imperatively, his share of the earth’s riches? Is he not just as much man as his employer? Why should some just manage to exist in want and poverty while others live on the fat of the land, when from their point of view there is no reason why the good things of this world should belong to some rather than to others? If the atheistic-naturalistic standpoint is justified, so also is the Socialist demand: that worldly goods and happiness should be distributed to all as equally as possible, that it is wrong for some to live a life of idle enjoyment in palaces while others live in miserable cellars and attics, barely able in spite of the most strenuous efforts to earn their daily bread.”36 Assuming matters to be just as Cathrein imagines them—that private property is a privilege of the owners, that the others are poorer in proportion as these are rich, that some starve because others carouse, that some live in miserable little rooms because others live in lordly places—does he really believe that it could possibly be a work of the Church to maintain such conditions? Whatever one may read into the Church’s social teaching, one cannot suppose that its founder or his supporters would have approved of its being used to bolster up unjust social institutions that are obviously disadvantageous to the greater part of humanity. Christianity would long since have vanished from the earth, were it that for which, in common with many of its bitterest enemies, Bismarck and Cathrein mistook it: a bodyguard for a social institution injurious to the masses.
The socialist idea can be suppressed neither by force nor by authority, for both are on the side of Socialism and not of its opponents. If guns and machine-guns are brought into action today they will be in the ranks of Socialism and Syndicalism, and not opposed to them. For the great mass of our contemporaries are imbued with the spirit of Socialism or of Syndicalism. Whatever system is set in authority at the present time, it can certainly not be Capitalism, for the masses do not believe in it.
The Battle of Ideas
It is a mistake to think that the lack of success of experiments in Socialism that have been made can help to overcome Socialism. Facts per se can neither prove nor refute anything. Everything is decided by the interpretation and explanation of the facts, by the ideas and the theories.
The man who clings to Socialism will continue to ascribe all the world’s evil to private property and to expect salvation from Socialism. Socialists ascribe the failures of Russian Bolshevism to every circumstance except the inadequacy of the system. From the socialist point of view, Capitalism alone is responsible for all the misery the world has had to endure in recent years. Socialists see only what they want to see and are blind to anything that might contradict their theory.
Only ideas can overcome ideas and it is only the ideas of Capitalism and of Liberalism that can overcome Socialism. Only by a battle of ideas can a decision be reached.
Liberalism and Capitalism address themselves to the cool, well-balanced mind. They proceed by strict logic, eliminating any appeal to the emotions. Socialism, on the contrary, works on the emotions, tries to violate logical considerations by rousing a sense of personal interest and to stifle the voice of reason by awakening primitive instincts.
Even with those of intellectually higher standing, with the few capable of independent reflection, this seems to give Socialism an advantage. With the others, the great masses who are unable to think, the Socialist position is considered unshakable. A speaker who inflames the passions of the masses is supposed to have a better chance of success than one who appeals to their reason. Thus the prospects of Liberalism in the fight with Socialism are accounted very poor.
This pessimistic point of view is completely mistaken in its estimate of the influence which rational and quiet reflection can exercise on the masses. It also exaggerates enormously the importance of the part played by the masses, and consequently mass-psychological elements, in creating and forming the predominant ideas of an epoch.
It is true that the masses do not think. But just for this reason they follow those who do think. The intellectual guidance of humanity belongs to the very few who think for themselves. At first they influence the circle of those capable of grasping and understanding what others have thought; through these intermediaries their ideas reach the masses and there condense themselves into the public opinion of the time. Socialism has not become the ruling idea of our period because the masses first thought out the idea of the socialization of the means of production and then transmitted it to the intellectually higher classes. Even the materialistic conception of history, haunted as it is by “the psyche of the people” as conceived by Romanticism and the historical school of jurisprudence does not risk such an assertion. Of itself the mass psyche has never produced anything but mass crime, devastation, and destruction.37 Admittedly the idea of Socialism is also in its effects nothing more than destruction, but it is nevertheless an idea. It had to be thought out, and this could only be the work of individual thinkers. Like every other great thought, it has penetrated to the masses only through the intellectual middle class. Neither the people nor the masses were the first socialists. Even today they are agrarian socialist and syndicalist rather than socialist. The first socialists were the intellectuals; they and not the masses are the backbone of Socialism.38 The power of Socialism too, is like any other power ultimately spiritual; and it finds its support in ideas proceeding from the intellectual leaders, who give them to the people. If the intelligentsia abandoned Socialism its power would end. In the long run the masses cannot withstand the ideas of the leaders. True, individual demagogues may be ready, for the sake of a career and against their better knowledge, to instil into the people ideas which flatter their baser instincts and which are therefore sure to be well received. But in the end, prophets who in their heart know themselves to be false cannot prevail against those filled with the power of sincere conviction. Nothing can corrupt ideas. Neither by money nor by other rewards can one hire men for the fight against ideas.
Human society is an issue of the mind. Social co-operation must first be conceived, then willed, then realized in action. It is ideas that make history, not the “material productive forces,” those nebulous and mystical schemata of the materialist conception of history. If we could overcome the idea of Socialism, if humanity could be brought to recognize the social necessity of private ownership in the means of production, then Socialism would have to leave the stage. That is the only thing that counts.
The victory of the socialist idea over the Liberal idea has only come about through the displacement of the social attitude, which has regard to the social function of the single institution and the total effect of the whole social apparatus, by an anti-social attitude, which considers the individual parts of the social mechanism as detached units. Socialism sees the individuals--the hungry, the unemployed, and the rich—and finds fault on that account; Liberalism never forgets the whole and the interdependence of every phenomenon. It knows well enough that private ownership in the means of production is not able to transform the world into a paradise; it has never tried to establish anything beyond the simple fact that the socialist order of society is unrealizable, and therefore less able than Capitalism to promote the well-being of all.
No one has understood Liberalism less than those who have joined its ranks during the recent decades. They have felt themselves obliged to fight excrescences” of Capitalism, thereby taking over without a qualm the characteristic anti-social attitude of the socialists. A social order has no excrescences which can be cut off at will. If a phenomenon results inevitably from a social system based on private ownership in the means of production, no ethical or aesthetic caprice can condemn it. Speculation, for example, which is inherent in all economic action, in a socialistic society as well as any other, cannot be condemned for the form it takes under Capitalism merely because the censor of morals mistakes its social function. Nor have these disciples of Liberalism been any more fortunate in their criticisms of Socialism. They have constantly declared that Socialism is a beautiful and noble ideal towards which one ought to strive were it realizable, but that, alas, it could not be so, because it presupposed human beings more perfect morally than those with whom we have to deal. It is difficult to see how people can decide that Socialism is in any way better than Capitalism unless they can maintain that it functions better as a social system. With the same justification it might be said that a machine constructed on the basis of perpetual motion would be better than one worked according to the given laws of mechanics—if only it could be made to function reliably. If the concept of Socialism contains an error which prevents that system from doing what it is supposed to do, then Socialism cannot be compared with the Capitalist system, for this has proved itself workable. Neither can it be called nobler, more beautiful or more just.
It is true, Socialism cannot be realized, but it is not because it calls for sublime and altruistic beings. One of the things this book set out to prove was that the socialist commonwealth lacks above all one quality which is indispensable for every economic system which does not live from hand to mouth but works with indirect and roundabout methods of production: that is the ability to calculate, and therefore to proceed rationally. Once this has been generally recognized, all socialist ideas must vanish from the minds of reasonable human beings.
How untenable is the opinion that Socialism must come because social evolution necessarily leads to it, has been shown in earlier sections of this book. The world inclines to Socialism because the great majority of people want it. They want it because they believe that Socialism will guarantee a higher standard of welfare. The loss of this conviction would signify the end of Socialism.
Socialism in History
Nothing is more difficult than to get a clear, historical perspective of a contemporary movement. The proximity of the phenomenon makes it difficult to recognize the whole in true proportion. Historical judgment above all demands distance.
Wherever Europeans or the descendants of European emigrants live, we see Socialism at work today; and in Asia it is the banner round which the antagonists of European civilization gather. If the intellectual dominance of Socialism remains unshaken, then in a short time the whole co-operative system of culture which Europe has built up during thousands of years will be shattered. For a socialist order of society is unrealizable. All efforts to realize Socialism lead only to the destruction of society. Factories, mines, and railways will come to a standstill, towns will be deserted. The population of the industrial territories will die out or migrate elsewhere. The farmer will return to the self-sufficiency of the closed, domestic economy. Without private ownership in the means of production there is, in the long run, no production other than a hand-to-mouth production for one’s own needs.
We need not describe in detail the cultural and political consequences of such a transformation. Nomad tribes from the Eastern steppes would again raid and pillage Europe, sweeping across it with swift cavalry. Who could resist them in the thinly populated land left defenceless after the weapons inherited from the higher technique of Capitalism had worn out?
This is one possibility. But there are others. It might so happen that some nations would remain socialistic while others returned to Capitalism. Then the socialist countries alone would proceed towards social decline. The capitalist countries would progress to a higher development of the division of labour until at last, driven by the fundamental social law to draw the greatest number of human beings into the personal division of labour, and the whole earth’s surface into the geographical division of labour, they would impose culture upon the backward nations or destroy them if they resisted. This has always been the historical fate of nations who have eschewed the road of capitalist development or who have halted prematurely upon it.
It may be that we exaggerate enormously the importance of the present day socialist movement. Perhaps it has no more significance than the outbreaks against private property in the medieval persecution of the Jews, in the Franciscan movement, or in the Reformation period. And the Bolshevism of Lenin and Trotsky is possibly no more important than Knipperdolling’s and Bockelson’s39 anabaptist rule in Münster; it is no greater in proportion to the latter than is modern Capitalism in proportion to the Capitalism of the sixteenth century. Just as civilization overcame those attacks so it may emerge stronger and purer from the upheavals of our time.
The Crisis of Civilization
Society is a product of will and action. Only human beings are able to will and act. All the mysticism and symbolism of collectivist philosophy cannot help us over the fact that we can speak only figuratively of the thinking, willing, and acting of communities, and that the conception of sentient thinking, willing, and acting communities is merely anthropomorphism. Society and the individual postulate each other; those collective bodies, which collectivism assumes to have existed logically and historically before individuals, may have been herds and hordes, but they were in no way societies--that is, associations created and existing by means of the collaboration of thinking creatures. Human beings construct society by making their actions a mutually conditioned co-operation.
The basis and starting point of social co-operation lie in peace-making, which consists in the mutual recognition of the “state of property.” Out of a de facto having, maintained by force, arises the legal concept of ownership, and simultaneously, the legal order and the coercive apparatus to maintain it. All this is the result of conscious willing and awareness of the aims willed. But this willing sees and wills only the most immediate and direct result: of the remoter consequences it knows nothing and can know nothing. Men who create peace and standards of conduct are only concerned to provide for the needs of the coming hours, days, years; that they are, at the same time, working to build a great structure like human society, escapes their notice. Therefore the individual institutions, which collectively support the social organism, are created with no other view in mind than the utility of the moment. They seem individually necessary and useful to their creators; their social function remains unknown to them.
The human mind ripens slowly to the recognition of social interdependence. At first, society is so mysterious and incomprehensible a formation to man that, to grasp its origin and nature, he continues to assume a divine will guiding human destinies from outside long after he has renounced this concept in the natural sciences. Kant’s Nature, which leads humanity towards a special aim, Hegel’s World Spirit, and the Darwinian Natural Selection are the last great expressions of this method. It remained for the liberal social philosophy to explain society through the actions of mankind without having to draw on metaphysics. It alone succeeds in interpreting the social function of private property. It is not content to accept the Just as a given category which cannot be analysed, or to account for it by an inexplicable predilection for just conduct. It bases its conclusions on the considerations of the consequences of acts and from a valuation of these consequences.
Judged from the old standpoint, property was sacred. Liberalism destroyed this nimbus, as it destroys all others. It “debased” property into a utilitarian, worldly matter. Property no longer has absolute value; it is valued as a means, that is, for its utility. In philosophy such a change of views involves no special difficulties; an inadequate doctrine is replaced by one more adequate. But a fundamental revolution of the mind cannot be carried out in life and in the consciousness of the masses with the same lack of friction. It is no trifle when an idol before which humanity has trembled and feared for thousands of years is destroyed and the frightened slave gets his freedom. That which was law because God and conscience so ordained, is now to be law because one can oneself make it so at will. What was certain becomes uncertain; right and wrong, good and evil, all these conceptions begin to totter. The old tables of the law are shattered and man is left to make new commandments for himself. This cannot be achieved by means of parliamentary debate or in peaceful voting. A revision of the moral code can only be carried through when minds are deeply stirred and passions unloosed. To recognize the social utility of private property one must first be convinced of the perniciousness of every other system.
That this is the substance of the great fight between Capitalism and Socialism becomes evident when we realize that the same process is taking place in other spheres of moral life. The problem of property is not the only one which is being discussed today. It is the same with the problem of bloodshed which, in its many aspects—and particularly in connection with war and peace—agitates the whole world. In sexual morality, too, age-old moral precepts are undergoing transformation. Things which were held to be taboo, rules which have been obeyed for moral and almost sacred reasons, are now prescribed or prohibited according to the importance attached to them in respect of the promotion of public welfare. This revaluation of the grounds on which precepts of conduct have been based has inevitably caused a general revision of standards which have been in force up till now. Men ask: are they really useful or might they not really be abolished?
In the inner life of the individual the fact that the moral equilibrium has not yet been reached causes grave psychological shocks, well known to medicine as neuroses.40 This is the characteristic malady of our time of moral transition, of the spiritual adolescence of the nations. In social life the discord works itself out in conflicts and errors which we witness with horror. Just as it is decisively important in the life of the individual man whether he merges safe and sound from the troubles and fears of adolescence of whether he carries away scars which hinder him permanently from developing his abilities, so is it important in what manner human society will struggle through the vexed problems of organization. A rise to a closer interdependence of individuals and hence to a higher well-being, on the one hand; a decay of co-operation and hence of wealth, on the other: these are the choices before us. There is no third alternative.
The great social discussion cannot proceed otherwise than by means of the thought, will, and action of individuals. Society lives and acts only in individuals; it is nothing more than a certain attitude on their part. Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.
Neither God nor a mystical “Natural Force” created society; it was created by mankind. Whether society shall continue to evolve or whether it shall decay lies—in the sense in which causal determination of all events permits us to speak of freewill—in the hand of man. Whether Society is good or bad may be a matter of individual judgment; but whoever prefers life to death, happiness to suffering, well-being to misery, must accept society. And whoever desires that society should exist and develop must also accept, without limitation or reserve, private ownership in the means of production.
We may divide the various attempts, which have been made to think out a system of economic calculation which would work under Socialism, into two main groups. In so doing we leave out of count works based on the labour theory of value which are misleading from the very outset. The first would contain those which may be designated syndicalist constructions, the second those which try to evade the impossibility of solving the problem by assuming that economic data do not change. The error in both groups of proposals should be clear from what we have said above (pp. 97-130). The following criticism, which I have made of two typical constructions of this kind, is intended to add further elucidations.41
In an article entitled “Sozialistische Rechnungslegung” (Socialist Accounting)42 Karl Polányi has attempted to solve what he calls “the problem of socialist accounting” which is, according to him, “generally recognized to be the key problem of the socialist economy.” Polányi first admits unreservedly that he considers the solution of the problem impossible “in a central administrative economy.”43 His attempt to solve the problem is designed only for ’a functionally organized socialist transition-economy.” This is the name he gives to a type of society corresponding approximately to the ideal of the English Guild Socialists. But his concept of the nature and possibilities of his system is, unfortunately, no less nebulous and vague than that of the Guild Socialists themselves. The political community “is considered to be ’the owner of the means of production’; but no direct right of disposing of production is implied by this ownership.” This right belongs to associations of producers, elected by workers in the various branches of production. The several individual producers’ associations are to be amalgamated as the Congress of producers’ associations, which “represents the whole of production.” Confronting this is the “Commune,” as the second “functional main association of society.” The Commune is not only the political organ, but also the “real bearer of the community’s higher aims.” Each of these two functional associations exercise “within its own sphere the legislative and executive functions.” Agreements between these functional main associations constitute the highest power in society.44
Now the defect in this system is the obscurity in which it evades the central problem—Socialism or Syndicalism? With the Guild-Socialists, Polányi expressly assigns to society, to the Commune, ownership of the means of production. In doing so he seems to think he has said enough to save his system from the charge of Syndicalism. But in the next sentence he withdraws what he has said. Ownership is the right of disposal. If the right of disposal belongs not to the Commune, but to the producers’ association, these are the owners, and we have before us a syndicalist community. One or the other it must be; between Syndicalism and Socialism there can be no compromise or reconciliation. Polányi does not see this. He says: “Functional representatives (associations) of one and of the same person can never irreconcilably conflict with each other; this is the fundamental idea of every functional constitution. For the settlement of each conflict, as it arises, either joint committees of the Commune and the Producers’ Association are provided or a kind of Supreme Constitutional Court (co-ordinating organs), which has, however, no legislative power and only limited executive power (guarding law and order, etc.).”45 This fundamental idea of the functional form of constitution is, however, wrong. If the political parliament is to be formed by the votes of all citizens, with equal voting rights for each—and this condition is implied by Polányi and all other similar systems—then the parliament and the congress of producers’ associations, which is the result of an electoral structure quite differently built up, may, easily, conflict. These conflicts cannot be settled by joint committees or by law courts. The committees can settle the quarrel only if one or other of the main associations preponderates within them. If both are equally strong, the committee can come to no decision. If one of the two associations preponderates the ultimate decision lies with it. A law court cannot settle questions of political or economic practice. Law courts can give judgment only on the basis of already existing norms, which they apply to individual cases. If they are to deal with questions of utility, then they are in reality not law courts but supreme political authorities, and everything we have said about the committee is true of them.
If the final decision rests with neither the Commune nor the Congress of Producers’ Associations, the system cannot live at all. If ultimate decision lies with the Commune, we have to deal with a “central administrative economy,” and this, as even Polányi admits, could not calculate economically. If the Producers’ Associations decide, then we have a syndicalist community.
Polányi’s obscurity on this fundamental point allows him to accept a merely apparent solution as an actual workable solution of the problem. His associations and sub-associations maintain a mutual exchange-relationship; they receive and give as if they were owners. Thus a market and market-prices are formed. But because he thinks he has surmounted the unbridgeable gulf between Socialism and Syndicalism, Polányi does not perceive that this is incompatible with Socialism. We might say much more about other errors in the details of Polányi’s system. But in view of his fundamental mistake they are of little interest, as they are peculiar to Polányi’s train of thought. That fundamental mistake is, however, no peculiarity of Polányi’s; all guild socialist systems share it. Polányi has the merit of having worked out this system more clearly than most other writers. He has thus exposed its weakness more clearly. He must also be given due credit for having realized that economic calculation would be impossible in a centralized administrative economy with no markets.
Another contribution to our problem comes from Eduard Heimann.46 Heimann is a believer in an ethical or religious Socialism. But his political views do not blind him to the problem of economic calculation. In treating this, he follows the arguments of Max Weber. Max Weber had seen that this was the “absolutely central” problem for Socialism, and had shown in a detailed discussion, in which he rejected Otto Neurath’s pet dreams of “calculation in kind” (“Naturalrechnung”) that rational economic action was impossible without money and money-accounting.47 Heimann therefore tries to prove that one could calculate in a socialist economy.
Whilst Polányi proceeds from a system allied to the English guild socialists, Heimann develops proposals parallel to the German ideas for a planned economy. It is characteristic that the arguments, nevertheless, resemble Polányi’s on the only point that matters: they are regrettably vague just where they ought to be explicit about the relationship between the individual productive groups, into which the society organized according to planned economy is to be divided, and society as a whole. Thus he is able to speak of trade taking place as in a market,48 without noticing that the planned economy, completely and logically carried through, is tradeless and that what might be called buying and selling should, according to its nature, be described quite otherwise. Heimann makes this mistake because he thinks that the characteristic mark of the planned economy is above all the monopolistic amalgamation of individual branches of production, instead of the dependence of production on the unitary will of a central organ. This mistake is all the more astonishing as the very name “planned economy” and all the arguments brought forward to support it stress particularly that the economic direction would be unitary. Heimann does indeed see the hollowness of the propaganda which works with the catchword “anarchy of production.”49 But this ought never to have allowed him to forget that just this point and nothing else, is what sharply divides Socialism from Capitalism.
Like most writers who have dealt with the planned economy, Heimann does not notice that a planned economy logically carried out is nothing more than pure Socialism and differs from the strictly centrally organized socialist community only in externals. That under the unitary direction of the central authority the administration of individual branches of production is entrusted to seemingly independent departments does not alter the fact that only the central authority directs. The relations between the individual departments are settled, not on the market by the competition of buyers and sellers, but the command of authority. The problem is this: that there is no standard by which one may account and calculate the effects of these authoritarian interventions, because the central authority cannot be guided by exchange-relationships formed on a market. The authority may indeed base its calculations on substitution-relations, which it determines itself. But this decision is arbitrary; it is not based, as are market prices, on the subjective valuations of individuals and imputed to the producers’ goods by the cooperation of all those active in production and trade. Rational economic calculation cannot therefore be based upon it.
Heimann achieves an apparent solution of the problem by invoking the theory of costs. Economic calculation is to be based upon cost computations, prices are to be calculated on the basis of the average costs of production, including wages, of the works attached to the accounting-office.50 This is a solution which might have satisfied us two or three generations ago. It is not enough nowadays. If by costs we mean the loss of utility which a different use of the factors of production could have avoided, it is easy to see that Heimann is moving in a circle. In the socialist community only an order from the central authority could enable industry to use the factors of production elsewhere, and the problem is just whether this authority could calculate so as to decide upon such an order. The competition of entrepreneurs who, in a social order based on private property, try to use goods and services most profitably, is replaced in the planned economy—as in every imaginable form of socialist society—by actions-according-to-plan of the supreme authority. Now it is only by this competition between entrepreneurs, trying to wrest from each other the material means of production and the services of labour, that the prices of the factors of production are formed. Where production is to be carried on “according to plan,” that is, by a central authority to whom everything is subject, the basis of calculation of profitability vanishes; only accounting in kind remains. Heimann says: “As soon as real competition exists on the market for consumers’ goods, the price-relationships thus determined spread from there through all the stages of production, provided that pricing is effected reasonably; and this happens independently of the constitution of the parties in the markets for producers’ goods.”51 This, however, would only be the case if there were genuine competition. Heimann conceives society to be the association of a number of “monopolists,” that is, of departments of the socialist community, to each of which is entrusted the exclusive working of a delimited field of production. If these buy producers’ goods on the “market,” it is not competition, because the central authority has in advance assigned to them the field in which they are to be active and which they must not leave. Competition exists only when everyone produces what seems to promise the best profit. I have tried to show that this can only be ensured by private ownership in the means of production.
Heimann’s picture of the socialist community considers only the current transformation of raw materials into consumers’ goods; it thus creates the impression that the individual departments could proceed independently. Far more important than this part of the productive process is the renewal of capital and the investment of newly-formed capital. This is the central problem of economic calculation, not the problem of disposing of the circulating capital already in existence. One cannot base decisions of this sort, which are binding for years and decades ahead, on the momentary demand for consumers’ goods. One must look to the future, that is, one must be “speculative.” Heimann’s scheme, which enlarges or restricts production mechanically and automatically, so to speak, according to the present demand for consumers’ goods, fails here entirely. For to solve the problem of value by going back to costs would suffice only for a theoretically conceivable state of equilibrium, imaginatively conceivable but empirically non-existent. Only in such an imaginary state of equilibrium do price and costs coincide, not in a changing economy.
For this reason, in my judgment, Heimann’s attempt to solve the problem, which I submit I have shown to be unsolvable, breaks down.
(Originally published in 1947 as Planned Chaos by the Foundation for Economic Education, Inc.)
The characteristic mark of this age of dictators, wars and revolutions is its anti-capitalistic bias. Most governments and political parties are eager to restrict the sphere of private initiative and free enterprise. It is an almost unchallenged dogma that capitalism is done for and that the coming of all-round regimentation of economic activities is both inescapable and highly desirable.
None the less capitalism is still very vigorous in the Western Hemisphere. Capitalist production has made very remarkable progress even in these last years. Methods of production were greatly improved. Consumers have been supplied with better and cheaper goods and with many new articles unheard of a short time ago. Many countries have expanded the size and improved the quality of their manufacturing. In spite of the anti-capitalistic policies of all governments and of almost all political parties, the capitalist mode of production is in many countries still fulfilling its social function in supplying the consumers with more, better and cheaper goods.
It is certainly not a merit of governments, politicians and labour union officers that the standard of living is improving in the countries committed to the principle of private ownership of the means of production. Not offices and bureaucrats, but big business deserves credit for the fact that most of the families in the United States own a motor car and a radio set. The increase in per capita consumption in America as compared with conditions a quarter of a century ago is not an achievement of laws and executive orders. It is an accomplishment of business men who enlarged the size of their factories or built new ones.
One must stress this point because our contemporaries are inclined to ignore it. Entangled in the superstitions of statism and government omnipotence, they are exclusively preoccupied with governmental measures. They expect everything from authoritarian action and very little from the initiative of enterprising citizens. Yet, the only means to increase well-being is to increase the quantity of products. This is what business aims at.
It is grotesque that there is much more talk about the achievements of the Tennessee Valley Authority than about all the unprecedented and unparalleled achievements of American privately operated processing industries. However, it was only the latter which enabled the United Nations to win the war and today enables the United States to come to the aid of the Marshall Plan countries.
The dogma that the State or the Government is the embodiment of all that is good and beneficial and that the individuals are wretched underlings, exclusively intent upon inflicting harm upon one another and badly in need of a guardian, is almost unchallenged. It is taboo to question it in the slightest way. He who proclaims the godliness of the State and the infallibility of its priests, the bureaucrats, is considered as an impartial student of the social sciences. All those raising objections are branded as biased and narrow-minded. The supporters of the new religion of statolatry are no less fanatical and intolerant than were the Mohammedan conquerors of Africa and Spain.
History will call our age the age of the dictators and tyrants. We have witnessed in the last years the fall of two of these inflated supermen. But the spirit which raised these knaves to autocratic power survives. It permeates textbooks and periodicals, it speaks through the mouths of teachers and politicians, it manifests itself in party programmes and in plays and novels. As long as this spirit prevails there cannot be any hope of durable peace, of democracy, of the preservation of freedom or of a steady improvement in the nation’s economic well-being.
The Failure of Interventionism
Nothing is more unpopular today than the free market economy, i.e., capitalism. Everything that is considered unsatisfactory in present-day conditions is charged to capitalism. The atheists make capitalism responsible for the survival of Christianity. But the papal encyclicals blame capitalism for the spread of irreligion and the sins of our contemporaries, and the Protestant churches and sects are no less vigorous in their indictment of capitalist greed. Friends of peace consider our wars as an offshoot of capitalist imperialism. But the adamant nationalist warmongers of Germany and Italy indicted capitalism for its “bourgeois” pacifism, contrary to human nature and to the inescapable laws of history. Sermonizers accuse capitalism of disrupting the family and fostering licentiousness. But the “progressives” blame capitalism for the preservation of allegedly outdated rules of sexual restraint. Almost all men agree that poverty is an outcome of capitalism. On the other hand many deplore the fact that capitalism, in catering lavishly to the wishes of people intent upon getting more amenities and a better living, promotes a crass materialism. These contradictory accusations of capitalism cancel one another. But the fact remains that there are few people left who would not condemn capitalism altogether.
Although capitalism is the economic system of modern Western civilization, the policies of all Western nations are guided by utterly anti-capitalistic ideas. The aim of these interventionist policies is not to preserve capitalism, but to substitute a mixed economy for it. It is assumed that this mixed economy is neither capitalism nor socialism. It is described as a third system, as far from capitalism as it is from socialism. It is alleged that it stands midway between socialism and capitalism, retaining the advantages of both and avoiding the disadvantages inherent in each.
More than half a century ago the outstanding man in the British socialist movement, Sidney Webb, declared that the socialist philosophy is “but the conscious and explicit assertion of principles of social organization which have been already in great part unconsciously adopted.” And he added that the economic history of the nineteenth century was “an almost continuous record of the progress of socialism.”52 A few years later an eminent British statesman, Sir William Harcourt, stated: “We are all socialists now.”53 When in 1913 an American, Elmer Roberts, published a book on the economic policies of the Imperial Government of Germany as conducted since the end of the 1870s, he called them “monarchical socialism.”54
However, it was not correct simply to identify interventionism and socialism. There are many supporters of interventionism who consider it the most appropriate method of realizing—step by step—full socialism. But there are also many interventionists who are not outright socialists; they aim at the establishment of the mixed economy as a permanent system of economic management. They endeavour to restrain, to regulate and to “improve” capitalism by government interference with business and by labour unionism.
In order to comprehend the working of interventionism and of the mixed economy it is necessary to clarify two points:
First: If within a society based on private ownership of the means of production some of these means are owned and operated by the government or by municipalities, this still does not make for a mixed system which would combine socialism and private ownership. As long as only certain individual enterprises are publicly controlled, the characteristics of the market economy determining economic activity remain essentially unimpaired. The publicly owned enterprises, too, as buyers of raw materials, semi-finished goods and labour, and as sellers of goods and services, must fit into the mechanism of the market economy. They are subject to the law of the market; they have to strive after profits or, at least, to avoid losses. When it is attempted to mitigate or to eliminate this dependence by covering the losses of such enterprises with subsidies out of public funds, the only result is a shifting of this dependence somewhere else. This is because the means for the subsidies have to be raised somewhere. They may be raised by collecting taxes. But the burden of such taxes has its effects on the public, not on the government collecting the tax. It is the market, and not the revenue department, which decides upon whom the burden of the tax falls and how it affects production and consumption. The market and its inescapable law are supreme.
Second: There are two different patterns for the realization of socialism. The one pattern—we may call it the Marxian or Russian pattern—is purely bureaucratic. All economic enterprises are departments of the government just as the administration of the army and the navy or the postal system. Every single plant, shop or farm, stands in the same relation to the superior central organization as does a post office to the office of the Postmaster-General. The whole nation forms one single labour army with compulsory service; the commander of this army is the chief of state.
The second pattern—we may call it the German or Zwangswirtschaft system55 —differs from the first one in that it, seemingly and nominally, maintains private ownership of the means of production, entrepreneurship, and market exchange. So-called entrepreneurs do the buying and selling, pay the workers, contract debts and pay interest and amortization. But they are no longer entrepreneurs. In Nazi Germany they were called shop managers or Betriebsführer. The government tells these seeming entrepreneurs what and how to produce, at what prices and from whom to buy, at what prices and to whom to sell. The government decrees at what wages labourers should work, and to whom and under what terms the capitalists should entrust their funds. Market exchange is but a sham. As all prices, wages and interest rates are fixed by the authority, they are prices, wages and interest rates in appearance only; in fact they are merely quantitative terms in the authoritarian orders determining each citizen’s income, consumption and standard of living. The authority, not the consumers, directs production. The central board of production management is supreme; all citizens are nothing else but civil servants. This is socialism with the outward appearance of capitalism. Some labels of the capitalistic market economy are retained, but they signify here something entirely different from what they mean in the market economy.
It is necessary to point out this fact to prevent a confusion of socialism and interventionism. The system of the hampered market economy, or interventionism, differs from socialism by the very fact that it is still market economy. The authority seeks to influence the market by the intervention of its coercive power, but it does not want to eliminate the market altogether. It desires that production and consumption should develop along lines different from those prescribed by the unhindered market, and it wants to achieve its aim by injecting into the working of the market orders, commands and prohibitions for whose enforcement the police power and its apparatus of coercion and compulsion stand ready. But these are isolated interventions; their authors assert that they do not plan to combine these measures into a completely integrated system which regulates all prices, wages and interest rates, and which thus places full control of production and consumption in the hands of the authorities.
However, all the methods of interventionism are doomed to failure. This means: the interventionist measures must needs result in conditions which from the point of view of their own advocates are more unsatisfactory than the previous state of affairs they were designed to alter. These policies are therefore contrary to purpose.
Minimum wage rates, whether enforced by government decree or by labour union pressure and compulsion, are useless if they fix wage rates at the market level. But if they try to raise wage rates above the level which the unhampered labour market would have determined, they result in permanent unemployment of a great part of the potential labour force.
Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other. If government spending is financed by borrowing from the commercial banks, it means credit expansion and inflation. If in the course of such an inflation the rise in commodity prices exceeds the rise in nominal wage rates, unemployment will drop. But what makes unemployment shrink is precisely the fact that real wage rates are falling.
The inherent tendency of capitalist evolution is to raise real wage rates steadily. This is the effect of the progressive accumulation of capital by means of which technological methods of production are improved. There is no means by which the height of wage rates can be raised for all those eager to earn wages other than through the increase of the per capita quota of capital invested. Whenever the accumulation of additional capital stops, the tendency towards a further increase in real wage rates comes to a standstill. If capital consumption is substituted for an increase in capital available, real wage rates must drop temporarily until the checks on a further increase in capital are removed. Government measures which retard capital accumulation or lead to capital consumption—such as confiscatory taxation—are therefore detrimental to the vital interests of the workers.
Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.
It can hardly be asserted that the economic history of the last decades has run counter to the pessimistic predictions of the economists. Our age has to face great economic troubles. But this is not a crisis of capitalism. It is the crisis of interventionism, of policies designed to improve capitalism and to substitute a better system for it.
No economist ever dared to assert that interventionism could result in anything else than in disaster and chaos. The advocates of interventionism--foremost among them the Prussian Historical School and the American Institutionalists—were not economists. On the contrary. In order to promote their plans they flatly denied that there is any such thing as economic law. In their opinion governments are free to achieve all they aim at without being restrained by an inexorable regularity in the sequence of economicphenomena Like the German socialist Ferdinand Lassalle, they maintain that the State is God.
The interventionists do not approach the study of economic matters with scientific disinterestedness. Most of them are driven by an envious resentment against those whose incomes are larger than their own. This bias makes it impossible for them to see things as they really are. For them the main thing is not to improve the conditions of the masses, but to harm the entrepreneurs and capitalists even if this policy victimizes the immense majority of the people.
In the eyes of the interventionists the mere existence of profits is objectionable. They speak of profit without dealing with its corollary, loss. They do not comprehend that profit and loss are the instruments by means of which the consumers keep a tight rein on all entrepreneurial activities. It is profit and loss that make the consumers supreme in the direction of business. It is absurd to contrast production for profit and production for use. On the unhampered market a man can earn profits only by supplying the consumers in the best and cheapest way with the goods they want to use. Profit and loss withdraw the material factors of production from the hands of the inefficient and place them in the hands of the more efficient. It is their social function to make a man the more influential in the conduct of business the better he succeeds in producing commodities for which people scramble. The consumers suffer when the laws of the country prevent the most efficient entrepreneurs from expanding the sphere of their activities. What made some enterprises develop into “big business” was precisely their success in filling best the demand of the masses.
Anti-capitalistic policies sabotage the operation of the capitalist system of the market economy. The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism. All those evils which the self-styled “progressives” interpret as evidence of the failure of capitalism are the outcome of their allegedly beneficial interference with the market. Only the ignorant, wrongly identifying interventionism and capitalism, believe that the remedy for these evils is socialism.
The Dictatorial, Anti-Democratic and Socialist Character of Interventionism
Many advocates of interventionism are bewildered when one tells them that in recommending interventionism they themselves are fostering anti-democratic and dictatorial tendencies and the establishment of totalitarian socialism. They protest that they are sincere believers and opposed to tyranny and socialism. What they aim at is only the improvement of the conditions of the poor. They say that they are driven by considerations of social justice, and favour a fairer distribution of income precisely because they are intent upon preserving capitalism and its political corollary or superstructure, viz., democratic government.
What these people fail to realize is that the various measures they suggest are not capable of bringing about the beneficial results aimed at. On the contrary they produce a state of affairs which from the point of view of their advocates is worse than the previous state which they were designed to alter. If the government, faced with this failure of its first intervention, is not prepared to undo its interference with the market and to return to a free economy, it must add to its first measure more and more regulations and restrictions. Proceeding step by step on this way it finally reaches a point in which all economic freedom of individuals has disappeared. Then socialism of the German pattern, the Zwangswirtschaft of the Nazis, emerges.
We have already mentioned the case of minimum wage rates. Let us illustrate the matter further by an analysis of a typical case of price control.
If the government wants to make it possible for poor parents to give more milk to their children, it must buy milk at the market price and sell it to those poor people with a loss at a cheaper rate; the loss may be covered from the means collected by taxation. But if the government simply fixes the price of milk at a lower rate than the market, the results obtained will be contrary to the aims of the government. The marginal producers will, in order to avoid losses, go out of the business of producing and selling milk. There will be less milk available for the consumers, not more. This outcome is contrary to the government’s intentions. The government interfered because it considered milk as a vital necessity. It did not want to restrict its supply.
Now the government has to face the alternative: either to refrain from any endeavours to control prices, or to add to its first measure a second one, i.e., to fix the prices of the factors of production necessary for the production of milk. Then the same story repeats itself on a remoter plane: the government has again to fix the prices of the factors of production necessary for the production of those factors of production which are needed for the production of milk. Thus the government has to go further and further, fixing the prices of all the factors of production—both human (labour) and material—and forcing every entrepreneur and every worker to continue work at these prices and wages. No branch of production can be omitted from this all-round fixing of prices and wages and this general order to continue production. If some branches of production were left free, the result would be a shifting of capital and labour to them and a corresponding fall of the supply of the goods whose prices the government had fixed. However, it is precisely these goods which the government considers as especially important for the satisfaction of the needs of the masses.
But when this state of all-round control of business is achieved, the market economy has been replaced by a system of planned economy, by socialism. Of course, this is not the socialism of immediate state management of every plant by the government as in Russia, but the socialism of the German or Nazi pattern.
Many people were fascinated by the alleged success of German price control. They said: You have only to be as brutal and ruthless as the Nazis and you will succeed in controlling prices. What these people, eager to fight Nazism by adopting its methods, did not see was that the Nazis did not enforce price control within a market society, but they established a full socialist system, a totalitarian commonwealth.
Price control is contrary to purpose if it is limited to some commodities only. It cannot work satisfactorily within a market economy. If the government does not draw from this failure the conclusion that it must abandon all attempts to control prices, it must go further and further until it substitutes socialist all-round planning for the market economy.
Production can either be directed by the prices fixed on the market by the buying and by the abstention from buying on the part of the public. Or it can be directed by the government’s central board of production management. There is no third solution available. There is no third social system feasible which would be neither market economy nor socialism. Government control of only a part of prices must result in a state of affairs which—without any exception—everybody considers as absurd and contrary to purpose. Its inevitable result is chaos and social unrest.
It is this that the economists have in mind in referring to economic law and asserting that interventionism is contrary to economic law.
In the market economy the consumers are supreme. Their buying and their abstention from buying ultimately determine what the entrepreneurs produce and in what quantity and quality. It determines directly the prices of the consumers’ goods and indirectly the prices of all producers’ goods, viz., labour and material factors of production. It determines the emergence of profits and losses and the formation of the rate of interest. It determines every individual’s income. The focal point of the market economy is the market, i.e., the process of the formation of commodity prices, wage rates and interest rates and their derivatives, profits and losses. It makes all men in their capacity as producers responsible to the consumers. This dependence is direct with entrepreneurs, capitalists, farmers and professional men, and indirect with people working for salaries and wages. The market adjusts the efforts of all those engaged in supplying the needs of the consumers to the wishes of those for whom they produce, the consumers. It subjects production to consumption.
The market is a democracy in which every penny gives a right to vote. It is true that the various individuals have not the same power to vote. The richer man casts more ballots than the poorer fellow. But to be rich and to earn a higher income is, in the market economy, already the outcome of a previous election. The only means to acquire wealth and to preserve it, in a market economy not adulterated by government-made privileges and restrictions, is to serve the consumers in the best and cheapest way. Capitalists and landowners who fail in this regard suffer losses. If they do not change their procedure, they lose their wealth and become poor. It is consumers who make poor people rich and rich people poor. It is the consumers who fix the wages of a movie star and an opera singer at a higher level than those of a welder or an accountant.
Every individual is free to disagree with the outcome of an election campaign or of the market process. But in a democracy he has no other means to alter things than persuasion. If a man were to say: “I do not like the mayor elected by majority vote; therefore I ask the government to replace him by the man I prefer,” one would hardly call him a democrat. But if the same claims are raised with regard to the market, most people are too dull to discover the dictatorial aspirations involved.
The consumers have made their choices and determined the income of the shoe manufacturer, the movie star and the welder. Who is Professor X to arrogate to himself the privilege of overthrowing their decision? If he were not a potential dictator, he would not ask the government to interfere. He would try to persuade his fellow-citizens to increase their demand for the products of the welders and to reduce their demand for shoes and pictures.
The consumers are not prepared to pay for cotton prices which would render the marginal farms, i.e., those producing under the least favourable conditions, profitable. This is very unfortunate indeed for the farmers concerned; they must discontinue growing cotton and try to integrate themselves in another way into the whole of production.
But what shall we think of the statesman who interferes by compulsion in order to raise the price of cotton above the level it would reach on the free market? What the interventionist aims at is the substitution of police pressure for the choice of the consumers. All this talk: the state should do this or that, ultimately means: the police should force consumers to behave otherwise than they would behave spontaneously. In such proposals as: let us raise farm prices, let us raise wage rates, let us lower profits, let us curtail the salaries of executives, the us ultimately refers to the police. Yet the authors of these projects protest that they are planning for freedom and industrial democracy.
In most non-socialist countries the labour unions are granted special rights. They are permitted to prevent non-members from working. They are allowed to call a strike and, when on strike, are virtually free to employ violence against all those who are prepared to continue working, viz., the strike-breakers. This system assigns an unlimited privilege to those engaged in vital branches of industry. Those workers whose strike cuts off the supply of water, light, food and other necessities are in a position to obtain all they want at the expense of the rest of the population. It is true that in the United States their unions have up to now exercised some moderation in taking advantage of this opportunity. Other American unions and many European unions have been less cautious. They are intent upon enforcing wage increases without bothering about the disaster inevitably resulting.
The interventionists are not shrewd enough to realize that labour union pressure and compulsion are absolutely incompatible with any system of social organization. The union problem has no reference whatsoever to the right of citizens to associate with one another in assemblies and associations; no democratic country denies its citizens this right. Neither does anybody dispute a man’s right to stop work and to go on strike. The only question is whether or not the unions should be granted the privilege of resorting with impunity to violence. This privilege is no less incompatible with socialism than with capitalism. No social co-operation under the division of labour is possible when some people or unions of people are granted the r ight to prevent by violence and the threat of violence other people from working. When enforced by violence, a strike in vital branches of production or a general strike are tantamount to a revolutionary destruction of society.
A government abdicates if it tolerates any non-governmental agency’s use of violence. If the government forsakes its monopoly of coercion and compulsion, anarchic conditions result. If it were true that a democratic system of government is unfit to protect unconditionally every individual’s right to work in defiance of the orders of a union, democracy would be doomed. Then dictatorship would be the only means to preserve the division of labour and to avoid anarchy. What generated dictatorship in Russia and Germany was precisely the fact that the mentality of these nations made suppression of union violence unfeasible under democratic conditions. The dictators abolished strikes and thus broke the spine of labour unionism. There is no question of strikes in the Soviet empire.
It is illusory to believe that arbitration of labour disputes could bring the unions into the framework of the market economy and make their functioning compatible with the preservation of domestic peace. Judicial settlement of controversies is feasible if there is a set of rules available, according to which individual cases can be judged. But if such a code is valid and its provisions are applied to the determination of the height of wage rates, it is no longer the market which fixes them, but the code and those who legislate with regard to it. Then the government is supreme and no longer the consumers buying and selling on the market. If no such code exists, a standard according to which a controversy between employers and employees could be decided is lacking. It is vain to speak of “fair” wages in the absence of such a code. The notion of fairness is nonsensical if not related to an established standard. In practice, if the employers do not yield to the threats of the unions, arbitration is tantamount to the determination of wage rates by the government-appointed arbitrator. Peremptory authoritarian decision is substituted for the market price. The issue is always the same: the government or the market. There is no third solution.
Metaphors are often very useful in elucidating complicated problems and in making them comprehensible to less intelligent minds. But they become misleading and result in nonsense if people forget that every comparison is imperfect. It is silly to take metaphorical idioms literally and to deduce from their interpretation features of the object one wished to make more easily understandable by their use. There is no harm in the economists’ description of the operation of the market as automatic and in their custom of speaking of the anonymous forces operating on the market. They could not anticipate that anybody would be so stupid as to take these metaphors literally.
No “automatic” and “anonymous” forces actuate the “mechanism” of the market. The only factors directing the market and determining prices are purposive acts of men. There is no automatism; there are men consciously aiming at ends chosen and deliberately resorting to definite means for the attainment of these ends. There are no mysterious mechanical forces; there is only the will of every individual to satisfy his demand for various goods. There is no anonymity; there are you and I and Bill and Joe and all the rest. And each of us is engaged both in production and consumption. Each contributes his share to the determination of prices.
The dilemma is not between automatic forces and planned action. It is between the democratic process of the market, in which every individual has his share, and the exclusive rule of a dictatorial body. Whatever people do in the market economy, is the execution of their own plans. In this sense every human action means planning. What those calling themselves planners advocate is not the substitution of planned action for letting things go. It is the substitution of the planner’s own plan for the plans of his fellow-men. The planner is a potential dictator who wants to deprive all other people of the power to plan and act according to their own plans. He aims at one thing only: the exclusive absolute pre-eminence of his own plan.
It is no less erroneous to declare that a government that is not socialistic has no plan. Whatever a government does is the execution of a plan, i.e., of a design. One may disagree with such a plan. But one must not say that it is not a plan at all. Professor Wesley C. Mitchell maintained that the British liberal government “planned to have no plan.”56 However, the British government in the liberal age certainly had a definite plan. Its plan was private ownership of the means of production, free initiative and market economy. Great Britain was very prosperous indeed under this plan which according to Professor Mitchell is “no plan.”
The planners pretend that their plans are scientific and that there cannot be disagreement with regard to them among well-intentioned and decent people. However, there is no such thing as a scientific ought. Science is competent to establish what is. It can never dictate what ought to be and what ends people should aim at. It is a fact that men disagree in their value judgments. It is insolent to arrogate to oneself the right to overrule the plans of other people and to force them to submit to the plan of the planner. Whose plan should be executed? The plan of the CIO or those of any other group? The plan of Trotsky or that of Stalin? The plan of Hitler or that of Strasser?
When people were committed to the idea that in the field of religion only one plan must be adopted, bloody wars resulted. With the acknowledgment of the principle of religious freedom these wars ceased. The market economy safeguards peaceful economic co-operation because it does not use force upon the economic plans of the citizens. If one master plan is to be substituted for the plans of each citizen, endless fighting must emerge. Those who disagree with the dictator’s plan have no other means to carry on than to defeat the despot by force of arms.
It is an illusion to believe that a system of planned socialism could be operated according to democratic methods of government. Democracy is inextricably linked with capitalism. It cannot exist where there is planning. Let us refer to the words of the most eminent of the contemporary advocates of socialism. Professor Harold Laski declared that the attainment of power by the British Labour Party in the normal parliamentary fashion must result in a radical transformation of parliamentary government. A socialist administration needs “guarantees” that its work of transformation would not be “disrupted” by repeal in event of its defeat at the polls. Therefore the suspension of the Constitution is “inevitable.”57 How pleased would Charles I and George III have been if they had known the books of Professor Laski!
Sidney and Beatrice Webb (Lord and Lady Passfield) tell us that “in any corporate action a loyal unity of thought is so important that, if anything is to be achieved, public discussion must be suspended between the promulgation of the decision and the accomplishment of the task.” Whilst “the work is in progress” any expression of doubt, or even of fear that the plan will not be successful, is “an act of disloyalty, or even of treachery.”58 Now as the process of production never ceases and some work is always in progress and there is always something to be achieved, it follows that a socialist government must never concede any freedom of speech and the press. “A loyal unity of thought,” what a high-sounding circumlocution for the ideals of Philip II and the Inquisition! In this regard another eminent admirer of the Soviets, Mr. T. G. Crowther, speaks without any reserve. He plainly declares that inquisition is “beneficial to science when it protects a rising class,”59 i.e., when Mr. Crowther’s friends resort to it. Hundreds of similar dicta could be quoted.
In the Victorian age, when John Stuart Mill wrote his essay On Liberty, such views as those held by Professor Laski, Mr. and Mrs. Webb and Mr. Crowther were called reactionary. Today they are called “progressive” and “liberal.” On the other hand people who oppose the suspension of parliamentary government and of the freedom of speech and the press and the establishment of inquisition are scorned as “reactionaries,” as “economic royalists” and as “Fascists.”
Those interventionists who consider interventionism as a method of bringing about full socialism step by step are at least consistent. If the measures adopted fail to achieve the beneficial results expected and end in disaster, they ask for more and more government interference until the government has taken over the direction of all economic activities. But those interventionists who look at interventionism as a means of improving capitalism and thereby preserving it are utterly confused.
In the eyes of these people all the undesired and undesirable effects of government interference with business are caused by capitalism. The very fact that a governmental measure has brought about a state of affairs which they dislike is for them a justification of further measures. They fail, for instance, to realize that the role monopolistic schemes play in our time is the effect of government interference such as tariffs and patents. They advocate government action for the prevention of monopoly. One could hardly imagine a more unrealistic idea. For the governments whom they ask to fight monopoly are the same governments who are devoted to the principle of monopoly. Thus, the American New Deal Government embarked upon a thorough-going monopolistic organization of every branch of American business, by the NRA, and aimed at organizing American farming as a vast monopolistic scheme, restricting farm output for the sake of substituting monopoly prices for the lower market prices. It was a party to various international commodity control agreements the undisguised aim of which was to establish international monopolies of various commodities. The same is true of all other governments. The Union of Soviet Socialist Republics was also a party to some of these intergovernmental monopolistic conventions.60 Its repugnance for collaboration with the capitalistic countries was not so great as to cause it to miss any opportunity for fostering monopoly.
The programme of this self-contradictory interventionism is dictatorship, supposedly to make people free. But the liberty its supporters advocate is liberty to do the “right” things, i.e., the things they themselves want to be done. They are not only ignorant of the economic problem involved. They lack the faculty of logical thinking.
The most absurd justification of interventionism is provided by those who look upon the conflict between capitalism and socialism as if it were a contest over the distribution of income. Why should not the propertied classes be more compliant? Why should they not accord to the poor workers a part of their ample revenues? Why should they oppose the government’s design to raise the share of the underprivileged by decreeing minimum wage rates and maximum prices and by cutting profits and interest rates down to a “fairer” level? Pliability in such matters, they say, would take the wind from the sails of the radical revolutionaries and preserve capitalism. The worst enemies of capitalism, they say, are those intransigent doctrinaires whose excessive advocacy of economic freedom, of laisser-faire and Manchesterism renders vain all attempts to come to a compromise with the claims of labour. These adamant reactionaries are alone responsible for the bitterness of contemporary party strife and the implacable hatred it generates. What is needed is the substitution of a constructive programme for the purely negative attitude of the economic royalists. And, of course, “constructive” is in the eyes of these people only interventionism.
However, this mode of reasoning is entirely vicious. It takes for granted that the various measures of government interference with business will attain those beneficial results which their advocates expect from them. It blithely disregards all that economics says about their futility in attaining the ends sought, and their unavoidable and undesirable consequences. The question is not whether minimum wage rates are fair or unfair, but whether or not they bring about unemployment of a part of those eager to work. By calling these measures just, the interventionist does not refute the objections raised against their expediency by the economists. He merely displays ignorance of the question at issue.
The conflict between capitalism and socialism is not a contest between two groups of claimants concerning the size of the portions to be allotted to each of them out of a definite supply of goods. It is a dispute concerning what system of social organization best serves human welfare. Those fighting socialism do not reject socialism because they envy the workers the benefits they (the workers) could allegedly derive from the socialist mode of production. They fight socialism precisely because they are convinced that it would harm the masses in reducing them to the status of poor serfs entirely at the mercy of irresponsible dictators.
In this conflict of opinions everybody must make up his mind and take a definite stand. Everybody must side either with the advocates of economic freedom or with those of totalitarian socialism. One cannot evade this dilemma by adopting an allegedly middle-of-the-road position, namely interventionism. For interventionism is neither a middle way nor a compromise between capitalism and socialism. It is a third system. It is a system the absurdity and futility of which is agreed upon not only by all economists but even by the Marxians.
There is no such thing as an “excessive” advocacy of economic freedom. On the one hand, production can be directed by the efforts of each individual to adjust his conduct so as to fill the most urgent wants of the consumers in the most appropriate way. This is the market economy. On the other hand, production can be directed by authoritarian decree. If these decrees concern only some isolated items of the economic structure, they fail to attain the ends sought, and their own advocates do not like their outcome. If they come up to all-round regimentation, they mean totalitarian socialism.
Men must choose between the market economy and socialism. The state can preserve the market economy in protecting life, health and private property against violent or fraudulent aggression; or it can itself control the conduct of all production activities. Some agency must determine what should be produced. If it is not the consumers by means of demand and supply on the market, it must be the government by compulsion.
Socialism and Communism
In the terminology of Marx and Engels the words communism and socialism are synonymous. They are alternately applied without any distinction between them. The same was true for the practice of all Marxian groups and sects until 1917. The political parties of Marxism which considered the Communist Manifesto as the unalterable gospel of their doctrine called themselves socialist parties. The most influential and most numerous of these parties, the German party, adopted the name Social Democratic Party. In Italy, in France and in all other countries in which Marxian parties already played a role in political life before 1917, the term socialist likewise superseded the term communist. No Marxian ever ventured, before 1917, to distinguish between communism and socialism.
In 1875, in his Criticism of the Gotha Programme of the German Social Democratic Party, Marx distinguished between a lower (earlier) and a higher (later) phase of the future communist society. But he did not reserve the name of communism to the higher phase, and did not call the lower phase socialism as differentiated from communism.
One of the fundamental dogmas of Marx is that socialism is bound to come “with the inexorability of a law of nature.” Capitalist production begets its own negation and establishes the socialist system of public ownership of the means of production. This process “executes itself through the operation of the inherent laws of capitalist production.”61 It is independent of the wills of people.62 It is impossible for men to accelerate it, to delay it or to hinder it. For “no social system ever disappears before all the productive forces are developed for the development of which it is broad enough, and new higher methods of production never appear before the material conditions of their existence have been hatched out in the womb of previous society.”63
This doctrine is, of course, irreconcilable with Marx’s own political activities and with the teachings he advanced for the justification of these activities. Marx tried to organize a political party which by means of revolution and civil war should accomplish the transition from capitalism to socialism. The characteristic feature of their parties was, in the eyes of Marx and all Marxian doctrinaires, that they were revolutionary parties invariably committed to the idea of violent action. Their aim was to rise in rebellion, to establish the dictatorship of the proletarians and to exterminate mercilessly all bourgeois. The deeds of the Paris Communards in 1871 were considered as the perfect model of such a civil war. The Paris revolt, of course, had lamentably failed. But later uprisings were expected to succeed.64
However, the tactics applied by the Marxian parties in various European countries were irreconcilably opposed to each of these two contradictory varieties of the teachings of Karl Marx. They did not place confidence in the inevitability of the coming of socialism. Neither did they trust in the success of a revolutionary upheaval. They adopted the methods of parliamentary action. They solicited votes in election campaigns and sent their delegates into the parliaments. They “degenerated” into democratic parties. In the parliaments they behaved like other parties of the opposition. In some countries they entered into temporary alliances with other parties, and occasionally socialist members sat in the cabinets. Later, after the end of the first World War, the socialist parties became paramount in many parliaments. In some countries they ruled exclusively, in others in close co-operation with “bourgeois” parties.
It is true that these domesticated socialists before 1917 never abandoned lip service to the rigid principles of orthodox Marxism. They repeated again and again that the coming of socialism is unavoidable. They emphasized the inherent revolutionary character of their parties. Nothing could arouse their anger more than when somebody dared to dispute their adamant revolutionary spirit. However, in fact they were parliamentary parties like all other parties.
From a correct Marxian point of view, as expressed in the later writings of Marx and Engels (but not yet in the Communist Manifesto), all measures designed to restrain, to regulate and to improve capitalism were simply “petty-bourgeois” nonsense stemming from an ignorance of the immanent laws of capitalist evolution. True socialists should not place any obstacles in the way of capitalist evolution. For only the full maturity of capitalism could bring about socialism. It is not only vain, but harmful to the interests of the proletarians to resort to such measures. Even labour-unionism is not an adequate means for the improvement of the conditions of the workers.65 Marx did not believe that interventionism could benefit the masses. He violently rejected the idea that such measures as minimum wage rates, price ceilings, restriction of interest rates, social security and so on are preliminary steps in bringing about socialism. He aimed at the radical abolition of the wages system which can be accomplished only by communism in its higher phase. He would have sarcastically ridiculed the idea of abolishing the “commodity character” of labour within the frame of a capitalist society by the enactment of a law.
But the socialist parties as they operated in the European countries were virtually no less committed to interventionism than the Sozialpolitik of the Kaiser’s Germany and the American New Deal. It was against this policy that George Sorel and Syndicalism directed their attacks. Sorel, a timid intellectual of a bourgeois background, deprecated the “degeneration” of the socialist parties for which he blamed their penetration by bourgeois intellectuals. He wanted to see the spirit of ruthless aggressiveness, inherent in the masses, revived and freed from the guardianship of intellectual cowards. For Sorel nothing counted but riots. He advocated action directe, i.e., sabotage and the general strike, as initiatory steps towards the final great revolution.
Sorel had success mostly among snobbish and idle intellectuals and no less snobbish and idle heirs of wealthy entrepreneurs. He did not perceptibly move the masses. For the Marxian parties in Western and Central Europe his passionate criticism was hardly more than a nuisance. His historical importance consisted mainly in the role his ideas played in the evolution of Russian Bolshevism and Italian Fascism.
In order to understand the mentality of the Bolshevists we must again refer to the dogmas of Karl Marx. Marx was fully convinced that capitalism is a stage of economic history which is not limited to a few advanced countries only. Capitalism has the tendency to convert all parts of the world into capitalist countries. The bourgeoisie forces all nations to become capitalist nations. When the final hour of capitalism sounds, the whole world will be uniformly in the stage of mature capitalism, ripe for the transition to socialism. Socialism will emerge at the same time in all parts of the world.
Marx erred on this point no less than in all his other statements. Today even the Marxians cannot and do not deny that there still prevail enormous differences in the development of capitalism in various countries. They realize that there are many countries which, from the point of view of the Marxian interpretation of history, must be described as precapitalistic. In these countries the bourgeoisie has not yet attained a ruling position and has not yet set the historical stage of capitalism which is the necessary prerequisite of the appearance of socialism. These countries therefore must first accomplish their “bourgeois revolution” and must go through all phases of capitalism before there can be any question of transforming them into socialist countries. The only policy which Marxians could adopt in such countries would be to support the bourgeois unconditionally, first in their endeavours to seize power and then in their capitalistic ventures. A Marxian party could for a very long time have no other task than to be subservient to bourgeois liberalism. This alone is the mission which historical materialism, if consistently applied, could assign to Russian Marxians. They would be forced to wait quietly until capitalism should have made their nation ripe for socialism.
But the Russian Marxians did not want to wait. They resorted to a new modification of Marxism according to which it was possible for a nation to skip one of the stages of historical evolution. They shut their eyes to the fact that this new doctrine was not a modification of Marxism, but rather the denial of the last remnant which was left of it. It was an undisguised return to the pre-Marxian and anti-Marxian socialist teachings according to which men are free to adopt socialism at any time if they consider it as a system more beneficial to the commonweal than capitalism. It utterly exploded all the mysticism inwrought into dialectical materialism and in the alleged Marxian discovery of the inexorable laws of mankind’s economic evolution.
Having emancipated themselves from Marxian determinism, the Russian Marxians were free to discuss the most appropriate tactics for the realization of socialism in their country. They were no longer bothered with economic problems. They had no longer to investigate whether or not the time had come. They had only one task to accomplish, the seizure of the reins of government.
One group maintained that lasting success could be expected only if the support of a sufficient number of the people, though not necessarily of the majority, could be won. Another group did not favour such a time-consuming procedure. They suggested a bold stroke. A small group of fanatics should be organized as the vanguard of the revolution. Strict discipline and unconditional obedience to the chief should make these professional revolutionists fit for a sudden attack. They should supplant the Czarist government and then rule the country according to the traditional methods of the Czar’s police.
The terms used to signify these two groups—Bolshevists (majority) for the latter and Mensheviks (minority) for the former—refer to a vote taken in 1903 at a meeting held for the discussion of these tactical issues. The only difference dividing the two groups from one another was this matter of tactical methods. They both agreed with regard to the ultimate end: socialism.
Both sects tried to justify their respective points of view by quoting passages from Marx’s and Engels’s writings. This is, of course, the Marxian custom. And each sect was in a position to discover in these sacred books dicta confirming its own stand.
Lenin, the Bolshevist chief, knew his countrymen much better than his adversaries and their leader, Plekhanov, did. He did not, like Plekhanov, make the mistake of applying to Russians the standards of the Western nations. He remembered how foreign women had twice simply usurped supreme power and quietly ruled for a life-time. He was aware of the fact that the terrorist methods of the Czar’s secret police were successful and he was confident that he could considerably improve on these methods. He was a ruthless dictator and he knew that the Russians lacked the courage to resist oppression. Like Cromwell, Robespierre and Napoleon, he was an ambitious usurper and fully trusted the absence of revolutionary spirit in the immense majority. The autocracy of the Romanovs was doomed because the unfortunate Nicholas II was a weakling. The socialist lawyer Kerensky failed because he was committed to the principle of parliamentary government. Lenin succeeded because he never aimed at anything else than his own dictatorship. And the Russians yearned for a dictator, for a successor of the Terrible Ivan.
The rule of Nicholas II was not ended by a real revolutionary upheaval. It collapsed on the battlefields. Anarchy resulted which Kerensky could not master. A skirmish in the streets of Saint Petersburg removed Kerensky. A short time later Lenin had his eighteenth Brumaire. In spite of all the terror practised by the Bolshevists the Constituent Assembly, elected by universal franchise for men and women, had only about twenty per cent Bolshevist members. Lenin dispelled by force of arms the Constituent Assembly. The short-lived “liberal” interlude was liquidated. Russia passed from the hands of the inept Romanovs into those of a real autocrat.
Lenin did not content himself with the conquest of Russia. He was fully convinced that he was destined to bring the bliss of socialism to all nations, not only to Russia. The official name which he chose for his government—Union of the Soviet Socialist Republics—does not contain any reference to Russia. It was designed as the nucleus of a world government. It was implied that all foreign comrades by rights owed allegiance to this government and that all foreign bourgeois who dared to resist were guilty of high treason and deserved capital punishment. Lenin did not doubt in the least that all Western countries were on the eve of the great final revolution. He daily expected its outbreak.
There was in the opinion of Lenin only one group in Europe that might—although without any prospect of success—try to prevent the revolutionary upheaval: the depraved members of the intelligentsia who had usurped the leadership of the socialist parties. Lenin had long hated these men for their addiction to parliamentary procedure and their reluctance to endorse his dictatorial aspirations. He raged against them because he held them responsible for the fact that the socialist parties had supported the war effort of their countries. Already in his Swiss exile, which ended in 1917, Lenin began to split the European socialist parties. Now he set up a new, a Third International which he controlled in the same dictatorial manner in which he directed the Russian Bolshevists. For this new party Lenin chose the name Communist Party. The communists were to fight unto death the various European socialist parties, these “social traitors,” and they were to arrange the immediate liquidation of the bourgeoisie and seizure of power by the armed workers. Lenin did not differentiate between socialism and communism as social systems. The goal which he aimed at was not called communism as opposed to socialism. The official name of the Soviet government is Union of the Socialist (not of the Communist) Soviet Republics. In this regard he did not want to alter the traditional terminology which considered the terms as synonymous. He merely called his partisans, the only sincere and consistent supporters of the revolutionary principles of orthodox Marxism, communists and their tactical methods communism because he wanted to distinguish them from the “treacherous hirelings of the capitalist exploiters,” the wicked Social Democratic leaders like Kautsky and Albert Thomas. These traitors, he emphasized, were anxious to preserve capitalism. They were not true socialists. The only genuine Marxians were those who rejected the name of socialists, irremediably fallen into disrepute.
Thus the distinction between communists and socialists came into being. Those Marxians who did not surrender to the dictator in Moscow called themselves social democrats or, in short, socialists. What characterized them was the belief that the most appropriate method for the realization of their plans to establish socialism, the final goal common to them as well as to the communists, was to win the support of the majority of their fellow-citizens. They abandoned the revolutionary slogans and tried to adopt democratic methods for the seizure of power. They did not bother about the problem whether or not a socialist regime is compatible with democracy. But for the attainment of socialism they were resolved to apply democratic procedures.
The communists, on the other hand, were in the early years of the Third International firmly committed to the principle of revolution and civil war. They were loyal only to their Russian chief. They expelled from their ranks everybody who was suspected of feeling himself bound by any of his country’s laws. They plotted unceasingly and squandered blood in unsuccessful riots.
Lenin could not understand why the communists failed everywhere outside Russia. He did not expect much from the American workers. In the United States, the communists agreed, the workers lacked the revolutionary spirit because they were spoiled by well-being and steeped in the vice of money-making. But Lenin did not doubt that the European masses were class-conscious and therefore fully committed to revolutionary ideas. The only reason why the revolution had not been realized was in his opinion the inadequacy and cowardice of the communist officials. Again and again he deposed his vicars and appointed new men. But he did not succeed any better.
In the Anglo-Saxon and in the Latin-American countries the socialist voters place confidence in democratic methods. Here the number of people who seriously aim at a communist revolution is very small. Most of those who publicly proclaim their adherence to the principles of communism would feel extremely unhappy if the revolution were to arise and expose their lives and their property to danger. If the Russian armies were to march into their countries or if domestic communists were to seize power without engaging them in the fight, they would probably rejoice in the hope of being rewarded for their Marxian orthodoxy. But they themselves do not long for revolutionary laurels.
It is a fact that in all these thirty years of passionate pro-Soviet agitation not a single country outside Russia went communist of its citizens’ own accord. Eastern Europe turned to communism only when the diplomatic arrangements of international power politics had converted it into a sphere of exclusive Russian influence and hegemony. It is unlikely that Western Germany, France, Italy and Spain will espouse communism if the United States and Great Britain do not adopt a policy of absolute diplomatic “désintéressement.” What gives strength to the communist movement in these and in some other countries is the belief that Russia is driven by an unflinching “dynamism” while the Anglo-Saxon powers are indifferent and not very much interested in their fate.
Marx and the Marxians erred lamentably when they assumed that the masses long for a revolutionary overthrow of the “bourgeois” order of society. The militant communists are to be found only in the ranks of those who make a living from their communism or expect that a revolution would further their personal ambitions. The subversive activities of these professional plotters are dangerous precisely on account of the naivety of those who are merely flirting with the revolutionary idea. Those confused and misguided sympathizers who call themselves “liberals” and whom the communists call “useful innocents,” the fellow-travellers and even the majority of the officially registered party members, would be terribly frightened if they were to discover one day that their chiefs mean business when preaching sedition. But then it may be too late to avert disaster.
For the time being, the ominous peril of the communist parties in the West lies in their stand on foreign affairs. The distinctive mark of all present-day communist parties is their devotion to the aggressive foreign policy of the Soviets. Whenever they must choose between Russia and their own country, they do not hesitate to prefer Russia. Their principle is: Right or wrong, my Russia. They strictly obey all orders issued from Moscow. When Russia was an ally of Hitler, the French communists sabotaged their own country’s war effort and the American communists passionately opposed President Roosevelt’s plans to aid England and France in their struggle against the Nazis. The communists all over the world branded all those who defended themselves against the German invaders as “imperialist warmongers.” But as soon as Hitler attacked Russia, the imperialist war of the capitalists changed over-night into a just war of defence. Whenever Stalin conquers one more country, the communists justify this aggression as an act of self-defence against “Fascists.”
In their blind worship of everything that is Russian, the communists of Western Europe and the United States by far surpass the worst excesses ever committed by chauvinists. They wax rapturous about Russian movies, Rus sian music and the alleged discoveries of Russian science. They speak in ecstatic words about the economic achievements of the Soviets. They ascribe the victory of the United Nations to the deeds of the Russian armed forces. Russia, they contend, has saved the world from the Fascist menace. Russia is the only free country while all other nations are subject to the dictatorship of the capitalists. The Russians alone are happy and enjoy the bliss of living a full life; in the capitalist countries the immense majority are suffering from frustration and unfulfilled desires. Just as the pious Muslim yearns for a pilgrimage to the Prophet’s tomb at Mecca, so the communist intellectual deems a pilgrimage to the holy shrines of Moscow as the event of his life.
However, the distinction in the use of the terms communists and socialists did not affect the meaning of the terms communism and socialism as applied to the final goal of the policies common to them both. It was only in 1928 that the programme of the Communist International, adopted by the sixth congress in Moscow,66 began to differentiate between communism and socialism (and not merely between communists and socialists).
According to this new doctrine there is, in the economic evolution of mankind, between the historical stage of capitalism and that of communism, a third stage, namely that of socialism. Socialism is a social system based on public control of the means of production and full management of all processes of production and distribution by a planning central authority. In this regard it is equal to communism. But it differs from communism in so far as there is no equality of the portions allotted to each individual for his own consumption. There are still wages paid to the comrades and these wage rates are graduated according to economic expediency as far as the central authority deems it necessary for securing the greatest possible output of products. What Stalin calls socialism corresponds by and large to Marx’s concept of the “early phase” of communism. Stalin reserves the term communism exclusively for what Marx called the “higher phase” of communism. Socialism, in the sense in which Stalin has lately used the term, is moving towards communism, but is in itself not yet communism. Socialism will turn into communism as soon as the increase in wealth to be expected from the operation of the socialist methods of production has raised the lower standard of living of the Russian masses to the higher standard which the distinguished holders of important offices enjoy in present-day Russia.67
The apologetical character of this new terminological practice is obvious. Stalin finds it necessary to explain to the vast majority of his subjects why their standard of living is extremely low, much lower than that of the masses in the capitalist countries and even lower than that of the Russian proletarians in the days of Czarist rule. He wants to justify the fact that salaries and wages are unequal, that a small group of Soviet officials enjoys all the luxuries modern technique can provide, that a second group, more numerous than the first one, but less numerous than the middle class in imperial Russia, lives in “bourgeois” style, while the masses, ragged and barefooted, subsist in congested slums and are poorly fed. He can no longer blame capitalism for this state of affairs. Thus he was compelled to resort to a new ideological makeshift.
Stalin’s problem was the more burning as the Russian communists in the early days of their rule had passionately proclaimed income equality as a principle to be enforced from the first instant of the proletarians’ seizure of power. Moreover, in the capitalist countries the most powerful demagogic trick applied by the Russia-sponsored communist parties is to excite the envy of those with lower incomes against all those with higher incomes. The main argument advanced by the communists for the support of their thesis that Hitler’s National Socialism was not genuine socialism, but, on the contrary, the worst variety of capitalism, was that there was in Nazi Germany inequality in the standard of living.
Stalin’s new distinction between socialism and communism is in open contradiction to the policy of Lenin, and no less to the tenets of the propaganda of the communist parties outside the Russian frontiers. But such contradictions do not matter in the realm of the Soviets. The word of the dictator is the ultimate decision, and nobody is so foolhardy as to venture opposition.
It is important to realize that Stalin’s semantical innovation affects merely the terms communism and socialism. He did not alter the meaning of the terms socialist and communist. The Bolshevist party is just as before called communist. The Russophile parties beyond the borders of the Soviet Union call themselves communist parties and are violently fighting the socialist parties which, in their eyes, are simply social traitors. But the official name of the Union of Soviet Socialist Republics remains unchanged.
The German, Italian and Japanese nationalists justified their aggressive policies by their lack of Lebensraum. Their countries are comparatively over populated. They are poorly endowed by nature and depend on the import of foodstuffs and raw materials from abroad. They must export manufactures to pay for these badly needed imports. But the protectionist policies espoused by the countries producing a surplus of foodstuffs and raw materials close their frontiers to import of manufactures. The world is manifestly tending towards a state of full economic autarky of each nation. In such a world, what fate is in store for those nations who can neither feed nor clothe their citizens out of domestic resources?
The Lebensraum doctrine of the self-styled “have-not” peoples emphasizes that there are in America and in Australia millions of acres of unused land much more fertile than the barren soil which the farmers of the have-not nations are tilling. Natural conditions for mining and manufacturing are likewise much more propitious than in the countries of the have-nots. But the German, Italian and Japanese peasants and workers are barred from access to these areas favoured by nature. The immigration laws of the comparatively underpopulated countries prevent their migration. These laws raise the marginal productivity of labour and thereby wage rates in the underpopulated countries and lower them in the overpopulated countries. The high standard of living in the United States and the British Dominions is paid for by a lowering of the standard of living in the congested countries of Europe and Asia.
The true aggressors, say these German, Italian and Japanese nationalists, are those nations who by means of trade and migration barriers have arrogated to themselves the lion’s share of the natural riches of the earth. Has not the Pope68 himself declared that the root causes of the World Wars are “that cold and calculating egoism which tends to hoard the economic resources and materials destined for the use of all to such an extent that the nations less favoured by nature are not permitted access to them”?69 The war that Hitler, Mussolini and Hirohito kindled was from this point of view a just war, for its only aim was to give to the have-nots what, by virtue of natural and divine right, belongs to them.
The Russians cannot venture to justify their aggressive policy by such arguments. Russia is a comparatively underpopulated country. Its soil is much better endowed by nature than that of any other nation. It offers the most advantageous conditions for the growing of all kinds of cereals, fruits, seeds and plants. Russia owns immense pastures and almost inexhaustible forests. It has the richest resources for the production of gold, silver, platinum, iron, copper, nickel, manganese and all other metals, and of oil. But for the despotism of the Czars and the lamentable inadequacy of the communist system, its population could long since have enjoyed the highest standard of living. It is certainly not lack of natural resources that pushes Russia towards conquest.
Lenin’s aggressiveness was an outgrowth of his conviction that he was the leader of the final world revolution. He considered himself as the legitimate successor of the First International, destined to accomplish the task in which Marx and Engels had failed. The knell of capitalism had sounded, and no capitalist machinations could delay the expropriation of the expropriators any longer. What was needed was only the dictator of the new social order. Lenin was ready to take the burden upon his shoulders.
Since the days of the Mongol invasions mankind has not had to face such an unflinching and thorough-going aspiration for unlimited world supremacy.In every country the Russian emissaries and the communist fifth columns were fanatically working for the “Anschluss” to Russia. But Lenin lacked the first four columns. Russia’s military forces were at that time contemptible. When they crossed the Russian borders, they were stopped by the Poles. They could not march further West. The great campaign for world conquest petered out.
It was just idle talk to discuss the problems whether communism in one country only is possible or desirable. The communists had failed utterly outside the Russian frontiers. They were forced to stay at home.
Stalin devoted all his energy to the organization of a standing army of a size the world had never seen before. But he was not more successful than Lenin and Trotsky had been. The Nazis easily defeated this army and occupied the most important part of Russia’s territory. Russia was saved by the British and, above all, by the American forces. American Lend-Lease enabled the Russians to follow on the heels of the Germans when the scarcity of equipment and the threatening American invasion forced them to withdraw from Russia. They could even occasionally defeat the rearguards of the retreating Nazis. They could conquer Berlin and Vienna when the American airplanes had smashed the German defences. When the Americans had crushed the Japanese, the Russians could quietly stab them in the back.
Of course, the communists inside and outside of Russia and the fellow-travellers passionately contend that it was Russia that defeated the Nazis and liberated Europe. They pass over in silence the fact that the only reason why the Nazis could not capture Moscow, Leningrad and Stalingrad was their lack of munitions, airplanes and gasoline. It was the blockade that made it impossible for the Nazis to provide their armies with the equipment needed, and to construct in the occupied Russian territory a transport system that could ship this equipment to the far distant front line. The decisive battle of the war was the battle of the Atlantic. The great strategical events in the war against Germany were the conquest of Africa and Sicily and the victory in Normandy. Stalingrad was, when measured by the gigantic standards of this war, hardly more than a tactical success. In the struggle against the Italians and the Japanese, Russia’s share was nil.
But the spoils of the victory go to Russia alone. While the other United Nations do not seek for territorial aggrandizement, the Russians are in full swing. They have annexed the three Baltic Republics, Bessarabia, Czechoslovakia’s province of Carpatho-Russia,70 a part of Finland, a great part of Poland and huge territories in the Far East. They claim the rest of Poland, Rumania, Hungary, Yugoslavia, Bulgaria, Korea and China as their exclusive sphere of influence. They are anxious to establish in these countries “friendly” governments, i.e. puppet governments. But for the opposition raised by the United States and Great Britain they would rule today in the whole of continental Europe, continental Asia and Northern Africa. Only the American and British garrisons in Germany bar the Russians’ way to the shores of the Atlantic.
Today, no less than after the first World War, the real menace for the West does not lie in the military power of Russia. Great Britain could easily repel a Russian attack and it would be sheer lunacy for the Russians to undertake a war against the United States. Not the Russian armies, but the communist ideologies threaten the West. The Russians know it very well and place confidence not in their own army, but in their foreign partisans. They want to overthrow the democracies from within, not from without. Their main weapon is the pro-Russian machinations of their Fifth Columns. These are the crack divisions of Bolshevism.
The communist writers and politicians inside and outside of Russia explain Russia’s aggressive policies as mere self-defence. It is, they say, not Russia that plans aggression but, on the contrary, the decaying capitalist democracies. Russia wants merely to defend its own independence. This is an old and well-tried method of justifying aggression. Louis XIV and Napoleon I, Wilhelm II and Hitler were the most peace-loving of all men. When they invaded foreign countries, they did so only in just self-defence. Russia was as much menaced by Esthonia or Latvia as Germany was by Luxemburg or Denmark.
An outgrowth of this fable of self-defence is the legend of the cordon sanitaire. The political independence of the small neighbour countries of Russia, it is maintained, is merely a capitalist makeshift designed to prevent the European democracies from being infected with the germ of communism. Hence, it is concluded, these small nations have forfeited their right to independence. For Russia has the inalienable right to claim that its neighbours—and likewise its neighbours’ neighbours—should only be ruled by “friendly,” i.e., strictly communist, governments. What would happen to the world if all great powers were to make the same pretension?
The truth is that it is not the governments of the democratic nations that aim at overthrowing the present Russian system. They do not foster pro-democratic fifth columns in Russia and they do not incite the Russian masses against their rulers. But the Russians are busy day and night fomenting unrest in every country.
The very lame and hesitant intervention of the Allied Nations in the Russian Civil War was not a pro-capitalist and anti-communist venture. For the Allied Nations, involved in their struggle for life and death with the Germans, Lenin was at that time merely a tool of their deadly foes. Ludendorff had dispatched Lenin to Russia in order to overthrow the Kerensky regime and to bring about the defection of Russia. The Bolshevists fought by force of arms all those Russians who wanted to continue the alliance with France, Great Britain and the United States. From a military point of view it was impossible for the Western nations to stay neutral while their Russian allies were desperately defending themselves against the Bolshevists. For the Allied Nations the Eastern Front was at stake. The cause of the “White” generals was their own cause.
As soon as the war against Germany came to an end in 1918, the Allies lost interest in Russian affairs. There was no longer any need for an Eastern Front. They did not care a whit about the internal problems of Russia. They longed for peace and were anxious to withdraw from the fighting. They were, of course, embarrassed because they did not know how to liquidate their venture with propriety. Their generals were ashamed of abandoning companions in arms who had fought to the best of their abilities in a common cause. To leave these men in the lurch was in their opinion nothing short of cowardice and desertion. Such considerations of military honour delayed for some time the withdrawal of the inconspicuous Allied detachments and the termination of deliveries to the Whites. When this was finally accomplished, the Allied statesmen felt relief. From then on they adopted a policy of strict neutrality with regard to Russian affairs.
It was very unfortunate indeed that the Allied Nations had been willynilly entangled in the Russian Civil War. It would have been better if the military situation of 1917 and 1918 had not compelled them to interfere. But one must not overlook the fact that the abandonment of intervention in Russia was tantamount to the final failure of President Wilson’s policy. The United States had entered the war in order to make “the world safe for democracy.” The victory had crushed the Kaiser and substituted in Germany a republican government for the comparatively mild and limited imperial autocracy. On the other hand, it had resulted in Russia in establishing a dictatorship compared with which the despotism of the Czars could be called liberal. But the Allies were not eager to make Russia safe for democracy as they had tried to do with Germany. After all, the Kaiser’s Germany had parliaments, ministers responsible to the parliaments, trial by jury, freedom of thought, of religion and of the press not much more limited than in the West, and many other democratic institutions. But Soviet Russia was an unlimited despotism.
The Americans, the French and the British failed to see things from this angle. But the anti-democratic forces in Germany, Italy, Poland, Hungary and the Balkans thought differently. As the nationalists of these countries interpreted it, the neutrality of the Allied Powers with regard to Russia was evidence of the fact that their concern for democracy had been a mere blind. The Allies, they argued, had fought Germany because they envied Germany’s economic prosperity and they spared the new Russian autocracy because they were not afraid of Russian economic power. Democracy, these nationalists concluded, was nothing else than a convenient catchword to delude gullible people. And they became frightened that the emotional appeal of this slogan would one day be used as a disguise for insidious assaults against their own independence.
Since the abandonment of the intervention Russia had certainly no longer any reason to fear the great Western powers. Neither were the Soviets afraid of a Nazi aggression. The assertions to the contrary, very popular in Western Europe and in America, resulted from complete ignorance of German affairs. But the Russians knew Germany and the Nazis. They had read Mein Kampf. They learned from this book not only that Hitler coveted the Ukraine, but also that Hitler’s fundamental strategical idea was to embark upon the conquest of Russia only after having definitely and forever annihilated France. The Russians were fully convinced that Hitler’s expectation, as expressed in Mein Kampf, that Great Britain and the United States would keep out of this war and would quietly let France be destroyed, was vain. They were certain that such a new world war, in which they themselves planned to stay neutral, would result in a new German defeat. And this defeat, they argued, would make Germany—if not the whole of Europe— safe for Bolshevism. Guided by this opinion, Stalin already in the time of the Weimar Republic aided the then secret German rearmament. The German communists helped the Nazis as much as they could in their endeavours to undermine the Weimar regime. Finally Stalin entered in August 1939 into an open alliance with Hitler, in order to give him a free hand against the West.
What Stalin—like all other people—did not anticipate was the overwhelming success of the German armies in 1940. Hitler attacked Russia in 1941 because he was fully convinced that not only France but also Great Britain was done for, and that the United States, menaced in the rear by Japan, would not be strong enough to interfere successfully with European affairs.
The disintegration of the Hapsburg Empire in 1918 and the Nazi defeat in 1945 have opened the gates of Europe to Russia. Russia is today the only military power on the European continent. But why are the Russians so intent upon conquering and annexing? They certainly do not need the resources of these countries. Neither is Stalin driven by the idea that such conquests could increase his popularity with the Russian masses. His subjects are indifferent to military glory.
It is not the masses whom Stalin wants to placate by his aggressive policy, but the intellectuals. For their Marxian orthodoxy is at stake, the very foundation of the Soviet might.
These Russian intellectuals were narrow-minded enough to absorb modifications of the Marxian creed which were in fact an abandonment of the essential teachings of dialectical materialism, provided that these modifications flattered their Russian chauvinism. They swallowed the doctrine that their holy Russia could skip one of the inextricable stages of economic evolution as described by Marx. They prided themselves on being the vanguard of the proletariat and the world revolution who, by realizing socialism first in one country only, set up a glorious example for all other nations. But it is impossible to explain to them why the other nations do not finally catch up with Russia. In the writings of Marx and Engels, which one cannot keep out of their hands, they discover that the fathers of Marxism considered Great Britain and France and even Germany as the countries most advanced in civilization and in the evolution of capitalism. These students of the Marxian universities may be too dull to comprehend the philosophical and economic doctrines of the Marxian gospel. But they are not too dull to see that Marx considered those Western countries as much more advanced than Russia.
Then some of these students of economic policies and statistics begin to suspect that the standard of living of the masses is much higher in the capitalist countries than in their own country. How can this be? Why are conditions much more propitious in the United States which—although foremost in capitalist production—is most backward in awakening class-consciousness in the proletarians?
The inference from these facts seems inescapable. If the most advanced countries do not adopt communism and fare rather well under capitalism, if communism is limited to a country which Marx considered as backward and does not bring about riches for all, is not perhaps the correct interpretation that communism is a feature of backward countries and results in general poverty? Must not a Russian patriot be ashamed of the fact that his country is committed to this system?
Such thoughts are very dangerous in a despotic country. Whoever dared to express them would be mercilessly liquidated by the G.P.U. But, even unspoken, they are on the tip of every intelligent man’s tongue. They trouble the sleep of the supreme officials and perhaps even that of the great dictator. He certainly has the power to crush every opponent. But considerations of expediency make it inadvisable to eradicate all somewhat judicious people and to run the country only with stupid blockheads.
This is the real crisis of Russian Marxism. Every day that passes without bringing the world revolution aggravates it. The Soviets must conquer the world or else they are menaced in their own country by a defection of the intelligentsia. It is concern about the ideological state of Russia’s shrewdest minds that pushes Stalin’s Russia towards unflinching aggression.
The dictatorial doctrine as taught by the Russian Bolshevists, the Italian Fascists and the German Nazis tacitly implies that there cannot arise any disagreement with regard to the question who shall be the dictator. The mystical forces directing the course of historical events designate the providential leader. All righteous people are bound to submit to the unfathomable decrees of history and to bend their knees before the throne of the man of destiny. Those who decline to do so are heretics, abject scoundrels who must be “liquidated.”
In reality the dictatorial power is seized by that candidate who succeeds in exterminating in time all his rivals and their helpers. The dictator paves his way to supreme power by slaughtering all his competitors. He preserves his eminent position by butchering all those who could possibly dispute it. The history of all oriental despotisms bears witness to this, as well as the experience of contemporary dictatorship.
When Lenin died in 1924, Stalin supplanted his most dangerous rival, Trotsky. Trotsky escaped, spent years abroad in various countries of Europe, Asia and America and was finally assassinated in Mexico City. Stalin remained the absolute ruler of Russia.
Trotsky was an intellectual of the orthodox Marxian type. As such he tried to represent his personal feud with Stalin as a conflict of principles. He tried to construct a Trotsky doctrine as distinguished from the Stalin doctrine. He branded Stalin’s policies as an apostasy from the sacred legacy of Marx and Lenin. Stalin retorted in the same way. In fact, however, the conflict was a rivalry of two men, not a conflict of antagonistic ideas and principles. There was some minor dissent with regard to tactical methods. But in all essential matters Stalin and Trotsky were in agreement.
Trotsky had lived, before 1917, many years in foreign countries and was to some degree familiar with the main languages of the Western peoples. He posed as an expert in international affairs. Actually he did not know anything about Western civilization, political ideas and economic conditions. As a wandering exile he had moved almost exclusively in the circles of his fellow-exiles. The only foreigners whom he had met occasionally in coffee-houses and club-rooms of Western and Central Europe were radical doctrinaires, by their Marxian prepossessions precluded from reality. His main reading was Marxian books and periodicals. He scorned all other writings as “bourgeois” literature. He was absolutely unfitted to see events from any other angle than that of Marxism. Like Marx he was ready to interpret every great strike and every small riot as the sign of the outbreak of the final great revolution.
Stalin is a poorly educated Georgian. He has not the slightest knowledge of any Western language. He does not know Europe or America. Even his achievements as a Marxian author are questionable. But it was precisely the fact that, although an adamant supporter of communism, he was not indoctrinated with Marxian dogmas that made him superior to Trotsky. Stalin was not deluded by the spurious tenets of dialectical materialism. When faced with a problem, he did not search for an interpretation in the writings of Marx and Engels. He trusted his common sense. He was judicious enough to discern the fact that the policy of world revolution as inaugurated by Lenin and Trotsky in 1917 had failed completely outside the borders of Russia.
In Germany the communists, led by Karl Liebknecht and Rosa Luxemburg, were crushed by detachments of the regular army and by nationalist volunteers in a bloody battle fought in January 1919 in the streets of Berlin. The communist seizure of power in Munich in spring 1919 and the Hölz riot71 in March 1921 ended likewise in disaster. In Hungary, in 1919, the communists were defeated by Horthy and Gömbös and the Rumanian army. In Austria various communist plots failed in 1918 and 1919; a violent upheaval in July 1927 was easily quelled by the Vienna police. In Italy, in 1920, the occupation of the factories was a complete miscarriage. In France and in Switzerland the communist propaganda seemed to be very powerful in the first years following the Armistice of 1918; but it evaporated very soon. In Great Britain, in 1926, the general strike called by the labour unions resulted in lamentable failure.
Trotsky was so blinded by his orthodoxy that he refused to admit that the Bolshevist methods had failed. But Stalin realized it very well. He did not abandon the idea of instigating revolutionary outbreaks in all foreign countries and of conquering the whole world for the Soviets. But he was fully aware of the fact that it was necessary to postpone the aggression for a few years and to resort to new methods for its execution. Trotsky was wrong in accusing Stalin of strangling the communist movement outside of Russia. What Stalin really did was to apply other means for the attainment of ends which are common to him and all other Marxians.
As an exegetic of Marxian dogmas Stalin was certainly inferior to Trotsky. But he surpassed his rival by far as a politician. Bolshevism owes its successes in world policies to Stalin, not to Trotsky.
In the field of domestic policies, Trotsky resorted to the well-tried traditional tricks which Marxians had always applied in criticizing socialist measures adopted by other parties. Whatever Stalin did was not true socialism and communism, but, on the contrary, the very opposite of it, a monstrous perversion of the lofty principles of Marx and Lenin. All the disastrous features of public control of production and distribution as they appeared in Russia were, in Trotsky’s interpretation, brought about by Stalin’s policies. They were not unavoidable consequences of communist methods. They were attendant phenomena of Stalinism, not of communism. It was exclusively Stalin’s fault that an absolutist irresponsible bureaucracy was supreme, that a class of privileged oligarchs enjoyed luxuries while the masses lived on the verge of starvation, that a terrorist regime executed the old guard of revolutionaries and condemned millions to slave labour in concentration camps, that the secret police was omnipotent, that the labour unions were powerless, that the masses were deprived of all rights and liberties. Stalin was not a champion of the egalitarian classless society. He was the pioneer of a return to the worst methods of class rule and exploitation. A new ruling class of about 10 per cent of the population ruthlessly oppressed and exploited the immense majority of toiling proletarians.
Trotsky was at a loss to explain how all this could be achieved by only one man and his few sycophants. Where were the “material productive forces,” much talked about in Marxian historical materialism, which—“independent of the wills of individuals”—determine the course of human events “with the inexorability of a law of nature”? How could it happen that one man was in a position to alter the “juridical and political superstructure” which is uniquely and inalterably fixed by the economic structure of society? Even Trotsky agreed that there was no longer any private ownership of the means of production in Russia. In Stalin’s empire, production and distribution are entirely controlled by “society.” It is a fundamental dogma of Marxism that the superstructure of such a system must necessarily be the bliss of the earthly paradise. There is in Marxian doctrines no room for an interpretation blaming individuals for a degenerative process which could convert the blessing of public control of business into evil. A consistent Marxian—if consistency were compatible with Marxism—would have to admit that Stalin’s political system was the necessary superstructure of communism.
All essential items in Trotsky’s programme were in perfect agreement with the policies of Stalin. Trotsky advocated the industrialization of Russia. It was this that Stalin’s Five-Year Plans aimed at. Trotsky advocated the collectivization of agriculture. Stalin established the Kolkhoz and liquidated the Kulaks. Trotsky favoured the organization of a big army. Stalin organized such an army. Neither was Trotsky when still in power a friend of democracy. He was, on the contrary, a fanatical supporter of dictatorial oppression of all “saboteurs.” It is true, he did not anticipate that the dictator could consider him, Trotsky, author of Marxian tracts and veteran of the glorious extermination of the Romanovs, as the most wicked saboteur. Like all other advocates of dictatorship, he assumed that he himself or one of his intimate friends would be the dictator.
Trotsky was a critic of bureaucratism. But he did not suggest any other method for the conduct of affairs in a socialist system. There is no other alternative to profit-seeking private business than bureaucratic management.72
The truth is that Trotsky found only one fault with Stalin: that he, Stalin, was the dictator and not himself, Trotsky. In their feud they both were right. Stalin was right in maintaining that his regime was the embodiment of socialist principles. Trotsky was right in asserting that Stalin’s regime had made Russia a hell.
Trotskyism did not entirely disappear with Trotsky’s death. Boulangerism in France, too, survived for some time the end of General Boulanger. There are still Carlists left in Spain although the line of Don Carlos died out. Such posthumous movements are, of course, doomed.
But in all countries there are people who, although themselves fanatically committed to the idea of all-round planning, i.e. public ownership of the means of production, become frightened when they are confronted with the real face of communism. These people are disappointed. They dream of a Garden of Eden. For them communism, or socialism, means an easy life in riches and the full enjoyment of all liberties and pleasures. They fail to realize the contradictions inherent in their image of the communist society. They have uncritically swallowed all the lunatic fantasies of Charles Fourier and all the absurdities of Veblen. They firmly believe in Engels’s assertion that socialism will be a realm of unlimited freedom. They indict capitalism for everything they dislike, and are fully convinced that socialism will deliver them from all evil. They ascribe their own failures and frustrations to the unfairness of this “mad” competitive system and expect that socialism will assign them that eminent position and high income which by right are due to them. They are Cinderellas yearning for the prince-saviour who will recognize their merits and virtues. The loathing of capitalism and the worship of communism are consolations for them. They help them to disguise to themselves their own inferiority, and to blame the “system” for their own shortcomings.
In advocating dictatorship such people always advocate the dictatorship of their own clique. In asking for planning, what they have in mind is always their own plan, not that of others. They will never admit that a socialist or communist regime is true and genuine socialism or communism, if it does not assign to themselves the most eminent position and the highest income. For them the essential feature of true and genuine communism is that all affairs are precisely conducted according to their own will, and that all those who disagree are beaten into submission.
It is a fact that the majority of our contemporaries are imbued with socialist and communist ideas. However, this does not mean that they are unanimous in their proposals for socialization of the means of production and public control of production and distribution. On the contrary. Each socialist coterie is fanatically opposed to the plans of all other socialist groups. The various socialist sects fight one another most bitterly.
If the case of Trotsky and the analogous case of Gregor Strasser in Nazi Germany were isolated cases, there would be no need to deal with them. But they are not casual incidents. They are typical. Study of them reveals the psychological causes both of the popularity of socialism and of its unfeasibility.
The Liberation of the Demons
The history of mankind is the history of ideas. For it is ideas, theories and doctrines that guide human action, determine the ultimate ends men aim at, and the choice of the means employed for the attainment of these ends. The sensational events which stir the emotions and catch the interest of superficial observers are merely the consummation of ideological changes. There are no such things as abrupt sweeping transformations of human affairs. What is called, in rather misleading terms, a “turning point in history” is the coming on the scene of forces which were already for a long time at work behind the scene. New ideologies, which had already long since superseded the old ones, throw off their last veil and even the dullest people become aware of the changes which they did not notice before.
In this sense Lenin’s seizure of power in October 1917 was certainly a turning point. But its meaning was very different from that which the communists attribute to it.
The Soviet victory played only a minor role in the evolution towards socialism. The pro-socialist policies of the industrial countries of Central and Western Europe were of much greater consequence in this regard. Bismarck’s social security scheme was a more momentous pioneering on the way towards socialism than was the expropriation of the backward Russian manufactures. The Prussian National Railways had provided the only instance of a government-operated business which, for some time at least, had avoided manifest financial failure. The British had already before 1914 adopted essential parts of the German social security system. In all industrial countries, the governments were committed to interventionist policies which were bound to result ultimately in socialism. During the war most of them embarked upon what was called war socialism. The German Hindenburg Programme which, of course, could not be executed completely on account of Germany’s defeat, was no less radical but much better designed than the much talked-about Russian Five-Year Plans.
For the socialists in the predominantly industrial countries of the West, the Russian methods could not be of any use. For these countries, production of manufactures for export was indispensable. They could not adopt the Russian system of economic autarky. Russia had never exported manufactures in quantities worth mentioning. Under the Soviet system it withdrew almost entirely from the world market of cereals and raw materials. Even fanatical socialists could not help admitting that the West could not learn anything from Russia. It is obvious that the technological achievements in which the Bolshevist gloried were merely clumsy imitations of things accomplished in the West. Lenin defined communism as: “the Soviet power plus electrification.” Now, electrification was certainly not of Russian origin, and the Western nations surpass Russia in the field of electrification no less than in every other branch of industry.
The real significance of the Lenin revolution is to be seen in the fact that it was the bursting forth of the principle of unrestricted violence and oppression. It was the negation of all the political ideals that had for three thousand years guided the evolution of Western civilization.
State and government are the social apparatus of violent coercion and repression. Such an apparatus, the police power, is indispensable in order to prevent anti-social individuals and bands from destroying social co-operation. Violent prevention and suppression of anti-social activities benefit the whole of society and each of its members. But violence and oppression are none the less evils and corrupt those in charge of their application. It is necessary to restrict the power of those in office lest they become absolute despots. Society cannot exist without an apparatus of violent coercion. But neither can it exist if the office holders are irresponsible tyrants free to inflict harm upon those they dislike.
It is the social function of the laws to curb the arbitrariness of the police. The rule of law restricts the arbitrariness of the Officers as much as possible. It strictly limits their discretion, and thus assigns to the citizens a sphere in which they are free to act without being frustrated by government interference.
Freedom and liberty always mean freedom from police interference. In nature there are no such things as liberty and freedom. There is only the adamant rigidity of the laws of nature to which man must unconditionally submit if he wants to attain any ends at all. Neither was there liberty in the imaginary paradisaical conditions which, according to the fantastic prattle of many writers, preceded the establishment of societal bonds. Where there is no government, everybody is at the mercy of his stronger neighbour. Liberty can be realized only within an established state ready to prevent a gangster from killing and robbing his weaker fellows. But it is the rule of law alone which hinders the rulers from turning themselves into the worst gangsters.
The laws establish norms of legitimate action. They fix the procedures required for the repeal or alteration of existing laws and for the enactment of new laws. They likewise fix the procedures required for the application of the laws in definite cases, the due process of law. They establish courts and tribunals. Thus they are intent upon avoiding a situation in which the individuals are at the mercy of the rulers.
Mortal men are liable to error, and legislators and judges are mortal men. It may happen again and again that the valid laws or their interpretation by the courts prevent the executive organs from resorting to some measures which could be beneficial. No great harm, however, can result. If the legislators recognize the deficiency of the valid laws, they can alter them. It is certainly a bad thing that a criminal may sometimes evade punishment because there is a loophole left in the law, or because the prosecutor has neglected some formalities. But it is the minor evil when compared with the consequences of unlimited discretionary power on the part of the “benevolent” despot.
It is precisely this point which anti-social individuals fail to see. Such people condemn the formalism of the due process of law. Why should the laws hinder the government from resorting to beneficial measures? Is it not fetishism to make supreme the laws, and not expediency? They advocate the substitution of the welfare state (Wohlfahrtsstaat) for the state governed by the rule of law (Rechtsstaat). In this welfare state, paternal government should be free to accomplish all things it considers beneficial to the commonweal. No “scraps of paper” should restrain an enlightened ruler in his endeavours to promote the general welfare. All opponents must be crushed mercilessly lest they frustrate the beneficial action of the government. No empty formalities must protect them any longer against their well-deserved punishment.
It is customary to call the point of view of the advocates of the welfare state the “social” point of view as distinguished from the “individualistic” and “selfish” point of view of the champions of the rule of law. In fact, however, the supporters of the welfare state are utterly anti-social and intolerant zealots. For their ideology tacitly implies that the government will exactly execute what they themselves deem right and beneficial. They entirely disregard the possibility that there could arise disagreement with regard to the question of what is right and expedient and what is not. They advocate enlightened despotism, but they are convinced that the enlightened despot will in every detail comply with their own opinion concerning the measures to be adopted. They favour planning, but what they have in mind is exclusively their own plan, not those of other people. They want to exterminate all opponents, that is, all those who disagree with them. They are utterly intolerant and are not prepared to allow any discussion. Every advocate of the welfare state and of planning is a potential dictator. What he plans is to deprive all other men of all their rights, and to establish his own and his friends’ unrestricted omnipotence. He refuses to convince is fellow-citizens. He prefers to “liquidate” them. He scorns the “bourgeois” society that worships law and legal procedure. He himself worships violence and bloodshed.
The irreconcilable conflict of these two doctrines, rule of law versus welfare state, was at issue in all the struggles which men fought for liberty. It was a long and hard evolution. Again and again the champions of absolutism triumphed. But finally the rule of law predominated in the realm of Western civilization. The rule of law, or limited government, as safeguarded by constitutions and bills of rights, is the characteristic mark of this civilization. It was the rule of law that brought about the marvelous achievements of modern capitalism and of its—as consistent Marxians should say—“superstructure,” democracy. It secured for a steadily increasing population unprecedented well-being. The masses in the capitalist countries enjoy today a standard of living far above that of the well-to-do of earlier ages.
All these accomplishments have not restrained the advocates of despotism and planning. However, it would have been preposterous for the champions of totalitarianism to disclose the inextricable dictatorial consequences of their endeavours openly. In the nineteenth century the ideas of liberty and the rule of law had won such a prestige that it seemed crazy to attack them frankly. Public opinion was firmly convinced that despotism was done for and could never be restored. Was not even the Czar of barbarian Russia forced to abolish serfdom, to establish trial by jury, to grant a limited freedom to the press and to respect the laws?
Thus the socialists resorted to a trick. They continued to discuss the coming dictatorship of the proletariat, i.e., the dictatorship of each socialist author’s own ideas, in their esoteric circles. But to the broad public they spoke in a different way. Socialism, they asserted, will bring true and full liberty and democracy. It will remove all kinds of compulsion and coercion. The state will “wither away.” In the socialist commonwealth of the future there will be neither judges and policemen nor prisons and gallows.
But the Bolshevists took off the mask. They were fully convinced that the day of their final and unshakable victory had dawned. Further dissimulation was neither possible nor required. The gospel of bloodshed could be preached openly. It found an enthusiastic response among all the degenerate literati and parlour intellectuals who for many years already had raved about the writings of Sorel and Nietzsche. The fruits of the “treason of the intellectuals”73 mellowed to maturity. The youths who had been fed on the ideas of Carlyle and Ruskin were ready to seize the reins.
Lenin was not the first usurper. Many tyrants had preceded him. But his predecessors were in conflict with the ideas held by their most eminent contemporaries. They were opposed by public opinion because their principles of government were at variance with the accepted principles of right and legality. They were scorned and detested as usurpers. But Lenin’s usurpation was seen in a different light. He was the brutal superman for whose coming the pseudo-philosophers had yearned. He was the counterfeit saviour whom history had elected to bring salvation through bloodshed. Was he not the most orthodox adept of Marxian “scientific” socialism? Was he not the man destined to realize the socialist plans for whose execution the weak statesmen of the decaying democracies were too timid? All well-intentioned people asked for socialism; science, through the mouths of the infallible professors, recommended it; the churches preached Christian socialism; the workers longed for the abolition of the wage system. Here was the man to fulfil all these wishes. He was judicious enough to know that you cannot make an omelet without breaking eggs.
Half a century ago all civilized people had censured Bismarck when he declared that history’s great problems must be solved by blood and iron. Now the majority of quasi-civilized men bowed to the dictator who was prepared to shed much more blood than Bismarck ever did.
This was the true meaning of the Lenin revolution. All the traditional ideas of right and legality were overthrown. The rule of unrestrained violence and usurpation was substituted for the rule of law. The “narrow horizon of bourgeois legality,” as Marx had dubbed it, was abandoned. Henceforth no laws could any longer limit the power of the elect. They were free to kill ad libitum. Man’s innate impulses towards violent extermination of all whom he dislikes, repressed by a long and wearisome evolution, burst forth. The demons were unfettered. A new age, the age of the usurpers, dawned. The gangsters were called to action, and they listened to the Voice.
Of course, Lenin did not mean this. He did not want to concede to other people the prerogatives which he claimed for himself. He did not want to assign to other men the privilege of liquidating their adversaries. Him alone had history elected and entrusted with the dictatorial power. He was the only “legitimate” dictator because—an inner voice had told him so. Lenin was not bright enough to anticipate that other people, imbued with other creeds, could be bold enough to pretend that they also were called by an inner voice. Yet, within a few years too such men, Mussolini and Hitler, became quite conspicuous.
It is important to realize that Fascism and Nazism were socialist dictatorships. The communists, both the registered members of the communist parties and the fellow-travellers, stigmatize Fascism and Nazism as the highest and last and most depraved stage of capitalism. This is in perfect agreement with their habit of calling every party which does not unconditionally surrender to the dictates of Moscow—even the German Social Democrats, the classical party of Marxism—hirelings of capitalism.
It is of much greater consequence that the communists have succeeded in changing the semantic connotation of the term Fascism. Fascism, as will be shown later, was a variety of Italian socialism. It was adjusted to the particular conditions of the masses in overpopulated Italy. It was not a product of Mussolini’s mind and will survive the fall of Mussolini. The foreign policies of Fascism and Nazism, from their early beginnings, were rather opposed to one another. The fact that the Nazis and the Fascists closely co-operated after the Ethiopian war, and were allies in the second World War, did not eradicate the differences between these two tenets any more than did the alliance between Russia and the United States eradicate the differences between Sovietism and the American economic system. Fascism and Nazism were both committed to the Soviet principle of dictatorship and violent oppression of dissenters. If one wants to assign Fascism and Nazism to the same class of political systems, one must call this class dictatorial regime and one must not neglect to assign the Soviets to the same class.
In recent years the communists’ semantic innovations have gone even further. They call everybody whom they dislike, every advocate of the free enterprise system, a Fascist. Bolshevism, they say, is the only really democratic system. All non-communist countries and parties are essentially undemocratic and Fascist.
It is true that sometimes also non-socialists—the last vestiges of the old aristocracy—toyed with the idea of an aristocratic revolution modelled according to the pattern of Soviet dictatorship. Lenin had opened their eyes. What dupes, they moaned, have we been! We have let ourselves be deluded by the spurious catchwords of the liberal bourgeoisie. We believed that it was not permissible to deviate from the rule of law and to crush mercilessly those challenging our rights. How silly were these Romanovs in granting to their deadly foes the benefits of a fair legal trial! If somebody arouses the suspicion of Lenin, he is done for. Lenin does not hesitate to exterminate, without any trial, not only every suspect, but all his kin and friends too. But the Czars were superstitiously afraid of infringing the rules established by those scraps of paper called laws. When Alexander Ulyanov conspired against the Czar’s life, he alone was executed; his brother Vladimir was spared. Thus Alexander III himself preserved the life of Ulyanov-Lenin, the man who ruthlessly exterminated his son, his daughter-in-law and their children and with them all the other members of the family he could catch. Was this not the most stupid and suicidal policy?
However, no action could result from the day dreams of these old Tories. They were a small group of powerless grumblers. They were not backed by any ideological forces and they had no followers.
The idea of such an aristocratic revolution motivated the German Stahlhelm and the French Cagoulards.74 The Stahlhelm was simply dispelled by order of Hitler. The French Government could easily imprison the Cagoulards before they had any opportunity to do harm.
The nearest approach to an aristocratic dictatorship is Franco’s regime. But Franco was merely a puppet of Mussolini and Hitler, who wanted to secure Spanish aid for the impending war against France or at least Spanish “friendly” neutrality. With his protectors gone, he will either have to adopt Western methods of government or face removal.
Dictatorship and violent oppression of all dissenters are today exclusively socialist institutions. This becomes clear as we take a closer look at Fascism and Nazism.
When the war broke out in 1914, the Italian socialist party was divided as to the policy to be adopted.
One group clung to the rigid principles of Marxism. This war, they maintained, is a war of the capitalists. It is not seemly for the proletarians to side with any of the belligerent parties. The proletarians must wait for the great revolution, the civil war of the united socialists against the united exploiters. They must stand for Italian neutrality.
The second group was deeply affected by the traditional hatred of Austria. In their opinion the first task of the Italians was to free their unredeemed brethren. Only then would the day of the socialist revolution appear.
In this conflict Benito Mussolini, the outstanding man in Italian socialism, chose at first the orthodox Marxian position. Nobody could surpass Mussolini in Marxian zeal. He was the intransigent champion of the pure creed, the unyielding defender of the rights of the exploited proletarians, the eloquent prophet of the socialist bliss to come. He was an adamant adversary of patriotism, nationalism, imperialism, monarchical rule and all religious creeds. When Italy in 1911 opened the great series of wars by an insidious assault upon Turkey, Mussolini organized violent demonstrations against the departure of troops for Libya. Now, in 1914, he branded the war against Germany and Austria as an imperialist war. He was then still under the dominating influence of Angelica Balabanoff, the daughter of a wealthy Russian landowner. Miss Balabanoff had initiated him into the subtleties of Marxism. In her eyes the defeat of the Romanovs counted more than the defeat of the Habsburgs. She had no sympathy for the ideals of the Risorgimento.
But the Italian intellectuals were first of all nationalists. As in all other European countries, most of the Marxians longed for war and conquest. Mussolini was not prepared to lose his popularity. The thing he hated most was not to be on the side of the victorious faction. He changed his mind and became the most fanatical advocate of Italy’s attack on Austria. With French financial aid he founded a newspaper to fight for the cause of the war.
The anti-Fascists blame Mussolini for this defection from the teachings of rigid Marxism. He was bribed, they say, by the French. Now, even these people should know that the publication of a newspaper requires funds. They themselves do not speak of bribery if a wealthy American provides a man with the money needed for the publication of a fellow-traveller newspaper, or if funds mysteriously flow into the communist publishing firms. It is a fact that Mussolini entered the scene of world politics as an ally of the democracies, while Lenin entered it as a virtual ally of imperial Germany.
More than anybody else Mussolini was instrumental in achieving Italy’s entry into the first World War. His journalistic propaganda made it possible for the government to declare war on Austria. Only those few people have a right to find fault with his attitude in the years 1914 to 1918 who realize that the disintegration of the Austro-Hungarian Empire spelled the doom of Europe. Only those Italians are free to blame Mussolini who begin to understand that the only means of protecting the Italian-speaking minorities in the littoral districts of Austria against the threatening annihilation by the Slavonic majorities was to preserve the integrity of the Austrian state, whose constitution guaranteed equal rights to all linguistic groups. Mussolini was one of the most wretched figures of history. But the fact remains that his first great political deed still meets with the approval of all his countrymen and of the immense majority of his foreign detractors.
When the war came to an end, Mussolini’s popularity dwindled. The communists, swept into popularity by events in Russia, carried on. But the great communist venture, the occupation of the factories in 1920, ended in complete failure, and the disappointed masses remembered the former leader of the socialist party. They flocked to Mussolini’s new party, the Fascists. The youth greeted with turbulent enthusiasm the self-styled successor of the Caesars. Mussolini boasted in later years that he had saved Italy from the danger of communism. His foes passionately dispute his claims. Communism, they say, was no longer a real factor in Italy when Mussolini seized power. The truth is that the frustration of communism swelled the ranks of the Fascists and made it possible for them to destroy all other parties. The overwhelming victory of the Fascists was not the cause, but the consequence, of the communist fiasco.
The programme of the Fascists, as drafted in 1919, was vehemently anti-capitalistic.75 The most radical New Dealers and even communists could agree with it. When the Fascists came to power, they had forgotten those points of their programme which referred to the liberty of thought and the press and the right of assembly. In this respect they were conscientious disciples of Bukharin and Lenin. Moreover they did not suppress, as they had promised, the industrial and financial corporations. Italy badly needed foreign credits for the development of its industries. The main problem for Fascism, in the first years of its rule, was to win the confidence of the foreign bankers. It would have been suicidal to destroy the Italian corporations.
Fascist economic policy did not—at the beginning—essentially differ from those of all other Western nations. It was a policy of interventionism. As the years went on, it more and more approached the Nazi pattern of socialism. When Italy, after the defeat of France, entered the second World War, its economy was by and large already shaped according to the Nazi pattern. The main difference was that the Fascists were less efficient and even more corrupt than the Nazis.
But Mussolini could not long remain without an economic philosophy of his own invention. Fascism posed as a new philosophy, unheard of before and unknown to all other nations. It claimed to be the gospel which the resurrected spirit of ancient Rome brought to the decaying democratic peoples whose barbarian ancestors had once destroyed the Roman empire. It was the consummation both of the Rinascimento and the Risorgimento in every respect, the final liberation of the Latin genius from the yoke of foreign ideologies. Its shining leader, the peerless Duce, was called to find the ultimate solution for the burning problems of society’s economic organization and of social justice.
From the dust-heap of discarded socialist utopias, the Fascist scholars salvaged the scheme of guild socialism. Guild socialism was very popular with British socialists in the last years of the first World War and in the first years following the Armistice. It was so impracticable that it disappeared very soon from socialist literature. No serious statesman ever paid any attention to contradictory and confused plans of guild socialism. It was almost forgotten when the Fascists attached it to a new label, and flamboyantly proclaimed corporativism as the new social panacea. The public inside and outside of Italy was captivated. Innumerable books, pamphlets and articles were written in praise of the stato corporativo. The governments of Austria and Portugal very soon declared that they were committed to the noble principles of corporativism. The papal encyclical Quadragesimo Anno (1931) contained some paragraphs which could be interpreted—but need not be—as an approval of corporativism. In France its ideas found many eloquent supporters.
It was mere idle talk. Never did the Fascists make any attempt to realize the corporativist programme, industrial self-government. They changed the name of the chambers of commerce into corporative councils. They called corporazione the compulsory organizations of the various branches of industry which were the administrative units for the execution of the German pattern of socialism they had adopted. But there was no question of the corporazione’s self-government. The Fascist cabinet did not tolerate anybody’s interference with its absolute authoritarian control of production. All the plans for the establishment of the corporative system remained a dead letter.
Italy’s main problem is its comparative overpopulation. In this age of barriers to trade and migration, the Italians are condemned to subsist permanently on a lower standard of living than that of the inhabitants of the countries more favoured by nature. The Fascists saw only one means to remedy this unfortunate situation: conquest. They were too narrow-minded to comprehend that the redress they recommended was spurious and worse than the evil. They were moreover so entirely blinded by self-conceit and vain-glory that they failed to realize that their provocative speeches were simply ridiculous. The foreigners whom they insolently challenged knew very well how negligible Italy’s military forces were.
Fascism was not, as its advocates boasted, an original product of the Italian mind. It began with a split in the ranks of Marxian socialism, which certainly was an imported doctrine. Its economic programme was borrowed from German non-Marxian socialism and its aggressiveness was likewise copied from Germans, the All-deutsche or Pan-German forerunners of the Nazis. Its conduct of government affairs was a replica of Lenin’s dictatorship. Corporativism, its much advertised ideological adornment, was of British origin. The only home-grown ingredient of Fascism was the theatrical style of its processions, shows and festivals.
The shortlived Fascist episode ended in blood, misery and ignominy. But the forces which generated Fascism are not dead. Fanatical nationalism is a feature common to all present-day Italians. The communists are certainly not prepared to renounce their principle of dictatorial oppression of all dissenters. Neither do the Catholic parties advocate freedom of thought, of the press or of religion. There are in Italy only very few people indeed who comprehend that the indispensable prerequisite of democracy and the rights of men is economic freedom.
It may happen that Fascism will be resurrected under a new label and with new slogans and symbols. But if this happens, the consequences will be detrimental. For Fascism is not as the Fascists trumpeted a “new way to life,”76 it is a rather old way towards destruction and death.
The philosophy of the Nazis, the German National Socialist Labour Party, is the purest and most consistent manifestation of the anticapitalistic and socialistic spirit of our age. Its essential ideas are not German or “Aryan” in origin, nor are they peculiar to the present day Germans. In the genealogical tree of the Nazi doctrine such Latins as Sismondi and Georges Sorel, and such Anglo-Saxons as Carlyle, Ruskin and Houston Stewart Chamberlain, were more conspicuous than any German. Even the best known ideological attire of Nazism, the fable of the superiority of the Aryan master race, was not of German provenance; its author was a Frenchman, Gobineau. Germans of Jewish descent, like Lassalle, Lasson, Stahl and Walter Rathenau, contributed more to the essential tenets of Nazism than such men as Sombart, Spann and Ferdinand Fried. The slogan into which the Nazis condensed their economic philosophy, viz., Gemeinnutz geht vor Eigennutz (i.e., the commonweal ranks above private profit), is likewise the idea underlying the American New Deal and the Soviet management of economic affairs. It implies that profit-seeking business harms the vital interests of the immense majority, and that it is the sacred duty of popular government to prevent the emergence of profits by public control of production and distribution.
The only specifically German ingredient in Nazism was its striving after the conquest of Lebensraum. And this, too, was an outcome of their agreement with the ideas guiding the policies of the most influential political parties of all other countries. These parties proclaim income equality as the main thing. The Nazis do the same. What characterizes the Nazis is the fact that they are not prepared to acquiesce in a state of affairs in which the Germans are doomed forever to be “imprisoned,” as they say, in a comparatively small and overpopulated area in which the productivity of labour must be smaller than in the comparatively underpopulated countries, which are better endowed with natural resources and capital goods. They aim at a fairer distribution of earth’s natural resources. As a “have-not” nation they look at the wealth of the richer nations with the same feelings with which many people in the Western countries look at the higher incomes of some of their countrymen. The “progressives” in the Anglo-Saxon countries assert that “liberty is not worth having” for those who are wronged by the comparative smallness of their incomes. The Nazis say the same with regard to international relations. In their opinion the only freedom that matters is Nahrungsfreiheit (viz., freedom from importing food). They aim at the acquisition of a territory so large and rich in natural resources that they could live in economic self-sufficiency at a standard not lower than that of any other nation. They consider themselves as revolutionaries fighting for their inalienable natural rights against the vested interests of a host of reactionary nations.
It is easy for economists to explode the fallacies involved in the Nazi doctrines. But those who disparage economics as “orthodox and reactionary,” and fantically support the spurious creeds of socialism and economic nationalism, were at a loss to refute them. For Nazism was nothing but the logical application of their own tenets to the particular conditions of comparatively overpopulated Germany.
For more than seventy years the German professors of political science, history, law, geography and philosophy eagerly imbued their disciples with a hysterical hatred of capitalism, and preached the war of “liberation” against the capitalistic West. The German “socialists of the chair,” much admired in all foreign countries, were the pacemakers of the two World Wars. At the turn of the century the immense majority of the Germans were already radical supporters of socialism and aggressive nationalism. They were then already firmly committed to the principles of Nazism. What was lacking and was added later was only a new term to signify their doctrine.
When the Soviet policies of mass extermination of all dissenters and of ruthless violence removed the inhibitions against wholesale murder, which still troubled some of the Germans, nothing could any longer stop the advance of Nazism. The Nazis were quick to adopt the Soviet methods. They imported from Russia: the one-party system and the pre-eminence of this party in political life; the paramount position assigned to the secret police; the concentration camps; the administrative execution or imprisonment of all opponents; the extermination of the families of suspects and of exiles; the methods of propaganda; the organization of affiliated parties abroad and their employment for fighting their domestic governments and espionage and sabotage; the use of the diplomatic and consular service for fomenting revolution; and many other things besides. There were nowhere more docile disciples of Lenin, Trotsky and Stalin than the Nazis were.
Hitler was not the founder of Nazism; he was its product. He was, like most of his collaborators, a sadistic gangster. He was uneducated and ignorant; he had failed even in the lower grades of high school. He never had any honest job. It is a fable that he had ever been a paperhanger. His military career in the first World War was rather mediocre. The First Class Iron Cross was given to him after the end of the war as a reward for his activities as a political agent. He was a maniac obsessed by megalomania. But learned professors nourished his self-conceit. Werner Sombart, who once had boasted that his life was devoted to the task of fighting for the ideas of Marx,77 Sombart, whom the American Economic Association had elected to Honorary membership and many non-German universities to honorary degrees, candidly declared that Führertum means a permanent revelation and that the Führer received his orders directly from God, the supreme Führer of the Universe.78
The Nazi plan was more comprehensive and therefore more pernicious than that of the Marxians. It aimed at abolishing laisser-faire not only in the production of material goods, but no less in the production of men. The Führer was not only the general manager of all industries; he was also the general manager of the breeding-farm intent upon rearing superior men and eliminating inferior stock. A grandiose scheme of eugenics was to be put into effect according to “scientific” principles.
It is vain for the champions of eugenics to protest that they did not mean what the Nazis executed. Eugenics aims at placing some men, backed by the police power, in complete control of human reproduction. It suggests that the methods applied to domestic animals be applied to men. This is precisely what the Nazis tried to do, The only objection which a consistent eugenist can raise is that his own plan differs from that of the Nazi scholars and that he wants to rear another type of men than the Nazis. As every supporter of economic planning aims at the execution of his own plan only, so every advocate of eugenic planning aims at the execution of his own plan and wants himself to act as the breeder of human stock.
The eugenists pretend that they want to eliminate criminal individuals. But the qualification of a man as a criminal depends upon the prevailing laws of the country and varies with the change in social and political ideologies. John Huss, Giordano Bruno and Galileo Galilei were criminals from the point of view of the laws which their judges applied. When Stalin robbed the Russian State Bank of several million rubles, he committed a crime. Today it is an offence in Russia to disagree with Stalin. In Nazi Germany sexual intercourse between “Aryans” and the members of an “inferior” race was a crime. Whom do the eugenists want to eliminate, Brutus or Caesar? Both violated the laws of their country. If eighteenth-century eugenists had prevented alcohol addicts from generating children, their planning would have eliminated Beethoven.
It must be emphasized again: there is no such thing as a scientific ought. Which men are superior and which are inferior can only be decided by personal value judgments not liable to Verification or falsification. The eugenists delude themselves in assuming that they themselves will be called to decide what qualities are to be conserved in the human stock. They are too dull to take into account the possibility that other people might make the choice according to their own value judgments.79 In the eyes of the Nazis the brutal killer, the “fair-haired beast,” is the most perfect specimen of mankind.
The mass slaughters perpetrated in the Nazi horror camps are too horrible to be adequately described by words. But they were the logical and consistent application of doctrines and policies parading as applied science and proved by some men who in a sector of the natural sciences have displayed acumen and technical skill in laboratory research.
The Teachings of Soviet Experience
Many people all over the world assert that the Soviet “experiment” has supplied conclusive evidence in favour of socialism and disproved all, or at least most, of the objections raised against it. The facts, they say, speak for themselves. It is no longer permissible to pay any attention to the spurious aprioristic reasoning of armchair economists criticizing the socialist plans. A crucial experiment has exploded their fallacies.
It is, first of all, necessary to comprehend that in the field of purposive human action and social relations no experiments can be made and no experiments have ever been made. The experimental method to which the natural sciences owe all their achievements is inapplicable in the social sciences. The natural sciences are in a position to observe in the laboratory experiment the consequences of the isolated change in one element only, while other elements remain unchanged. Their experimental observation refers ultimately to certain isolable elements in sense experience. What the natural sciences call facts are the causal relations shown in such experiments. Their theories and hypotheses must be in agreement with these facts.
But the experience with which the sciences of human action have to deal is essentially different. It is historical experience. It is an experience of complex phenomena, of the joint effects brought about by the co-operation of a multiplicity of elements. The social sciences are never in a position to control the conditions of change and to isolate them from one another in the way in which the experimenter proceeds in arranging his experiments. They never enjoy the advantage of observing the consequences of a change in one element only, other conditions being equal. They are never faced with facts in the sense in which the natural sciences employ this term. Every fact and every experience with which the social sciences have to deal is open to various interpretations. Historical facts and historical experience can never prove or disprove a statement in the way in which an experiment proves or disproves.
Historical experience never comments upon itself. It needs to be interpreted from the point of view of theories constructed without the aid of experimental observations. There is no need to enter into an epistemological analysis of the logical and philosophical problems involved. It is enough to refer to the fact that nobody—whether scientist or layman--ever proceeds otherwise when dealing with historical experience. Every discussion of the relevance and meaning of historical facts falls back very soon on a discussion of abstract general principles, logically antecedent to the facts to be elucidated and interpreted. Reference to historical experience can never solve any problem or answer any question. The same historical events and the same statistical figures are claimed as confirmations of contradictory theories.
If history could prove and teach us anything, it would be that private ownership of the means of production is a necessary requisite of civilization and material well-being. All civilizations have up to now been based on private property. Only nations committed to the principle of private property have risen above penury and produced science, art and literature. There is no experience to show that any other social system could provide mankind with any of the achievements of civilization. Nevertheless, only few people consider this as a sufficient and incontestable refutation of the socialist programme.
On the contrary, there are even people who argue the other way round. It is frequently asserted that the system of private property is done for precisely because it was the system that men applied in the past. However beneficial a social system may have been in the past, they say, it cannot be so in the future too; a new age requires a new mode of social organization. Mankind has reached maturity; it would be pernicious for it to cling to the principles to which it resorted in the earlier stages of its evolution. This is certainly the most radical abandonment of experimentalism. The experimental method may assert: because a produced in the past the result b, it will produce it in the future also. It must never assert: because a produced in the past the result b, it is proved that it cannot produce it any longer.
In spite of the fact that mankind has had no experience with the socialist mode of production, the socialist writers have constructed various schemes of socialist systems based on aprioristic reasoning. But as soon as anybody dares to analyse these projects and to scrutinize them with regard to their feasibility and their ability to further human welfare, the socialists vehemently object. These analyses, they say, are merely idle aprioristic speculations. They cannot disprove the correctness of our statements and the expediency of our plans. They are not experimental. One must try socialism and then the results will speak for themselves.
What these socialists ask for is absurd. Carried to its ultimate logical consequences, their idea implies that men are not free to refute by reasoning any scheme, however nonsensical, self-contradictory and impracticable, that any reformer is pleased to suggest. According to their view, the only method permissible for the refutation of such a—necessarily abstract and aprioristic—plan is to test it by reorganizing the whole of society according to its designs. As soon as a man sketches the plan for a better social order, all nations are bound to try it and to see what will happen.
Even the most stubborn socialists cannot fail to admit that there are various plans for the construction of the future utopia, incompatible with one another. There is the Soviet pattern of all-round socialization of all enterprises and their outright bureaucratic management; there is the German pattern of Zwangswirtschaft, towards the complete adoption of which the Anglo-Saxon countries are manifestly tending; there is guild socialism, under the name of corporativism still very popular in some Catholic countries. There are many other varieties. The supporters of most of these competing schemes assert that the beneficial results to be expected from their own scheme will appear only when all nations will have adopted it; they deny that socialism in one country only can already bring the blessings they ascribe to socialism. The Marxians declare that the bliss of socialism will emerge only in its “higher phase” which, as they hint, will appear only after the working class will have passed “through long struggles, through a whole series of historical processes, wholly transforming both circumstances and men.”80 The inference from all this is that one must realize socialism and quietly wait for a very long time until its promised benefits come. No unpleasant experiences in the period of transition, no matter how long this period may be, can disprove the assertion that socialism is the best of all conceivable modes of social organization. He that believeth shall be saved.
But which of the many socialist plans, contradicting one another, should be adopted? Every socialist sect passionately proclaims that its own brand is alone genuine socialism and that all other sects advocate counterfeit, entirely pernicious measures. In fighting one another, the various socialist factions resort to the same methods of abstract reasoning which they stigmatize as vain apriorism whenever they are applied against the correctness of their own statements and the expediency and practicability of their own schemes. There is, of course, no other method available. The fallacies implied in a system of abstract reasoning—such as socialism is—cannot be smashed otherwise than by abstract reasoning.
The fundamental objection advanced against the practicability of socialism refers to the impossibility of economic calculation. It has been demonstrated in an irrefutable way that a socialist commonwealth would not be in a position to apply economic calculation. Where there are no market prices for the factors of production because they are neither bought nor sold, it is impossible to resort to calculation in planning future action and in determining the result of past action. A socialist management of production would simply not know whether or not what it plans and executes is the most appropriate means to attain the ends sought. It will operate in the dark, as it were. It will squander the scarce factors of production both material and human (labour). Chaos and poverty for all will unavoidably result.
All earlier socialists were too narrow-minded to see this essential point. Neither did the earlier economists conceive its full importance. When the present writer in 1920 showed the impossibility of economic calculation under socialism, the apologists of socialism embarked upon the search for a method of calculation applicable to a socialist system. They utterly failed in these endeavours. The futility of the schemes they produced could easily be shown. Those communists who were not entirely intimidated by the fear of the Soviet executioners, for instance Trotsky, freely admitted that economic accounting is unthinkable without market relations.81 The intellectual bankruptcy of the socialist doctrine can no longer be disguised. In spite of its unprecedented popularity, socialism is done for. No economist can any longer question its impracticability. The avowal of socialist ideas is today the proof of a complete ignorance of the basic problems of economics. The socialist’s claims are as vain as those of the astrologers and the magicians.
With regard to this essential problem of socialism, viz., economic calculation, the Russian “experiment” is of no avail. The Soviets are operating within a world the greater part of which still clings to a market economy. They base the calculations on which they make their decisions on the prices established abroad. Without the help of these prices their actions would be aimless and planless. Only as far as they refer to this foreign price system are they able to calculate, keep books and prepare their plans. In this respect one may agree with the statement of various socialist and communist authors that socialism in one or a few countries only is not yet true socialism. Of course, these authors attach a quite different meaning to their assertion. They want to say that the full blessings of socialism can be reaped only in a world-embracing socialist community. Those familiar with the teachings of economics must, on the contrary, recognize that socialism will result in full chaos precisely if it is applied in the greater part of the world.
The second main objection raised against socialism is that it is a less efficient mode of production than is capitalism and that it will impair the productivity of labour. Consequently, in a socialist commonwealth the standard of living of the masses will be low when compared with conditions prevailing under capitalism. There is no doubt that this objection has not been disproved by the Soviet experience. The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism.
It is true that the advocates of socialism are intent upon interpreting the lowness of the Russian standard of living in a different way. As they see things, it was not caused by socialism, but was—in spite of socialism—brought about by other agencies. They refer to various factors, e.g., the poverty of Russia under the Czars, the disastrous effects of the wars, the alleged hostility of the capitalist democratic nations, the alleged sabotage of the remnants of the Russian aristocracy and bourgeoisie and of the Kulaks. There is no need to enter into an examination of these matters. For we do not contend that any historical experience could prove or disprove a theoretical statement in the way in which a crucial experiment can verify or falsify a statement concerning natural events. It is not the critics of socialism, but its fanatical advocates, who maintain that the Soviet “experiment” proves something with regard to the effects of socialism. However, what they are really doing in dealing with the manifest and undisputed facts of Russian experience is to push them aside by impermissible tricks and fallacious syllogisms. They disavow the obvious facts by commenting upon them in such a way as to deny their bearing and their significance upon the question to be answered.
Let us, for the sake of argument, assume that their interpretation is correct. But then it would still be absurd to assert that the Soviet experiment has evidenced the superiority of socialism. All that could be said is: the fact that the masses’ standard of living is low in Russia does not provide conclusive evidence that socialism is inferior to capitalism.
A comparison with experimentation in the field of the natural sciences may clarify the issue. A biologist wants to test a new patent food. He feeds it to a number of guinea pigs. They all lose weight and finally die. The experimenter believes that their decline and death were not caused by the patent food, but by merely accidental affliction with pneumonia. It would nevertheless be absurd for him to proclaim that his experiment had evidenced the nutritive value of the compound because the unfavourable result is to be ascribed to accidental occurrences, not causally linked with the experimental arrangement. The best he could contend is that the outcome of the experiment was not conclusive, that it does not prove anything against the nutritive value of the food tested. Things are, he could assert, as if no experiment had been tried at all.
Even if the Russian masses’ standard of living were much higher than that of the capitalist countries, this still would not be conclusive proof of the superiority of socialism. It may be admitted that the undisputed fact that the standard of living in Russia is lower than that in the capitalist West does not conclusively prove the inferiority of socialism. But it is nothing short of idiocy to announce that the experience of Russia has demonstrated the superiority of public control of production.
Neither does the fact that the Russian armies, after having suffered many defeats, finally—with armament manufactured by American big business and donated to them by the American taxpayers—could aid the Americans in the conquest of Germany prove the pre-eminence of communism. When the British forces had to sustain a temporary reverse in North Africa, Professor Harold Laski, that most radical advocate of socialism, was quick to announce the final failure of capitalism. He was not consistent enough to interpret the German conquest of the Ukraine as the final failure of Russian communism. Neither did he retract his condemnation of the British system when his country emerged victorious from the war. If the military events are to be considered as the proof of any social system’s excellence, it is rather the American than the Russian system for which they bear witness.
Nothing that has happened in Russia since 1917 contradicts any of the statements of the critics of socialism and communism. Even if one bases one’s judgment exclusively on the writings of communists and fellow-trav ellers, one cannot discover any feature in Russian conditions that tells in favour of the Soviet’s social and political system. All the technological improvements of the last decades originated in the capitalistic countries. It is true that the Russians have tried to copy some of these innovations. But so did all backward oriental peoples too.
Some communists are eager to have us believe that the ruthless oppression of dissenters and the radical abolition of the freedom of thought, speech and the press are not inherent marks of the public control of business. They are, they argue, only accidental phenomena of communism, its signature in a country which—as was the case with Russia—never enjoyed freedom of thought and conscience. However, these apologists for totalitarian despotism are at a loss to explain how the rights of man could be safeguarded under government omnipotence.
Freedom of thought and conscience is a sham in a country in which the authorities are free to exile everybody whom they dislike into the Arctic or the desert, and to assign him hard labour for life. The autocrat may always try to justify such arbitrary acts by pretending that they are motivated exclusively by considerations of public welfare and economic expediency. He alone is the supreme arbiter to decide all matters referring to the execution of the plan. Freedom of the press is illusory when the government owns and operates all paper mills, printing offices and publishing houses, and ultimately decides what is to be printed and what not. The right of assembly is vain if the government owns all assembly halls and determines for what purposes they shall be used. And so it is with all other liberties too. In one of his lucid intervals Trotsky—of course Trotsky the hunted exile, not the ruthless commander of the Red army—saw things realistically and declared: “In a country where the sole employer is the State, opposition means death by slow starvation. The old principle: who does not work shall not eat, has been replaced by a new one: who does not obey shall not eat.”82 This confession settles the issue.
What the Russian experience shows is a very low level of the standard of living of the masses and unlimited dictatorial despotism. The apologists of communism are intent upon explaining these uncontested facts as accidental only; they are, they say, not the fruit of communism, but occurred in spite of communism. But even if one were to accept these excuses for the sake of argument, it would be nonsensical to maintain that the Soviet “experiment” has demonstrated anything in favour of communism and socialism.
The Alleged Invitability of Socialism
Many people believe that the coming of totalitarianism is inevitable. The “wave of the future,” they say, “carries mankind inexorably towards a system under which all human affairs are managed by omnipotent dictators. It is useless to fight against the unfathomable decrees of history.”
The truth is that most people lack the intellectual ability and courage to resist a popular movement, however pernicious and ill-considered. Bismarck once deplored the lack of what he called civilian courage, i.e., bravery in dealing with civic affairs, on the part of his countrymen. But neither did the citizens of other nations display more courage and judiciousness when faced with the menace of communist dictatorship. They either yielded silently, or timidly raised some trifling objections.
One does not fight socialism by criticizing only some accidental features of its schemes. In attacking many socialists’ stand on divorce and birth control, or their ideas about art and literature, one does not refute socialism. It is not enough to disapprove of the Marxian assertions that the theory of relativity or the philosophy of Bergson or psycho-analysis is “bourgeois” moonshine. Those who find fault with Bolshevism and Nazism only for their anti-Christian leanings implicitly endorse all the rest of these bloody schemes.
On the other hand, it is sheer stupidity to praise the totalitarian regimes for alleged achievements which have no reference whatever to their political and economic principles. It is questionable whether the observations that in Fascist Italy the railway trains ran on schedule and the bug population of second-rate hotel beds was decreasing, were correct or not; but it is in any case of no importance for the problem of Fascism. The fellow-travellers are enraptured by Russian films, Russian music and Russian caviar. But there lived greater musicians in other countries and under other social systems; good pictures were produced in other countries too; and it is certainly not a merit of Generalissimo Stalin that the taste of caviar is delicious. Neither does the prettiness of Russian ballet dancers or the construction of a great power station on the Dnieper expiate for the mass slaughter of the Kulaks.
The readers of picture magazines and the movie-fans long for the picturesque. The operatic pageants of the Fascists and the Nazis and the parading of the girl-battalions of the Red army are after their heart. It is more fun to listen to the radio speeches of a dictator than to study economic treatises. The entrepreneurs and technologists who pave the way for economic improvement work in seclusion; their work is not suitable to be visualized on the screen. But the dictators, intent upon spreading death and destruction, are spectacularly in sight of the public. Dressed in military garb they eclipse in the eyes of the movie-goers the colourless bourgeois in plain clothes.
The problems of society’s economic organization are not suitable for light talk at fashionable cocktail parties. Neither can they be dealt with adequately by demagogues haranguing mass assemblies. They are serious things. They require painstaking study. They must not be taken lightly.
The socialist propaganda never encountered any decided opposition. The devastating critique by which the economists exploded the futility and impracticability of the socialist schemes and doctrines did not reach the moulders of public opinion. The universities were mostly dominated by socialist or interventionist pedants not only in continental Europe, where they were owned and operated by the governments, but even in the Anglo-Saxon countries. The politicians and the statesmen, anxious not to lose popularity, were lukewarm in their defence of freedom. The policy of appeasement, so much criticized when applied in the case of the Nazis and the Fascists, was practised universally for many decades with regard to all other brands of socialism. It was this defeatism that made the rising generation believe that the victory of socialism is inevitable.
It is not true that the masses are vehemently asking for socialism and that there is no means to resist them. The masses favour socialism because they trust the socialist propaganda of the intellectuals. The intellectuals, not the populace, are moulding public opinion. It is a lame excuse of the intellectuals that they must yield to the masses. They themselves have generated the socialist ideas and indoctrinated the masses with them. No proletarian or son of a proletarian has contributed to the elaboration of the interventionist and socialist programmes. Their authors were all of bourgeois background. The esoteric writings of dialectical materialism, of Hegel, the father both of Marxism and of German aggressive nationalism, the books of Georges Sorel, of Gentile and of Spengler were not read by the average man; they did not move the masses directly. It was the intellectuals who popularized them.
The intellectual leaders of the peoples have produced and propagated the fallacies which are on the point of destroying liberty and Western civilization. The intellectuals alone are responsible for the mass slaughters which are the characteristic mark of our century. They alone can reverse the trend and pave the way for a resurrection of freedom.
Not mythical “material productive forces,” but reason and ideas determine the course of human affairs. What is needed to stop the trend towards socialism and despotism is common sense and moral courage.
Ludwig von Mises (1881-1973) was the acknowledged leader of the Austrian School of economic thought, a prodigious originator in economic theory, and a prolific author. A library of his books would total twenty-one volumes if confined to first editions, forty-eight volumes if all revised editions and translations were included, and still more if the Festschriften and other volumes containing contributions by him were added.
Von Mises’ writings and lectures encompassed economic theory, history, epistemology, government, and political philosophy. His contributions to economic theory include important clarifications on the quantity theory of money, the theory of the trade cycle, the integration of monetary theory with economic theory in general, and a demonstration that socialism must fail because it cannot solve the problem of economic calculation. Mises was the first scholar to recognize that economics is part of a larger science in human action, a science which Mises called “praxeology”.
Ludwig von Mises receved doctorates in law and economics from the University of Vienna in 1906. In 1909 he became Economic Advisor to the Austrian Chamber of Commerce (comparable to the U.S. Department of Commerce). After serving in World War I, he became Professor of Economics at the University of Vienna and, in 1934, Professor of International Relations at the Graduate Institute of International Studies in Geneva. In 1945 he became Visiting Professor at New York University where he remained until his retirement in 1969. In a lecturing and teaching career that spanned many continents and more than half a century, Mises numbered among his students one Nobel Laureate, F.A. Hayek, two presidents of the American Economic Association, Gottfried Haberler and Fritz Machlup, and many other economists of international reputation.
His major works are The Theory of Money and Credit (1912), Socialism (1922), Human Action (1949), Theory and History (1957), Epistemological Problems of Economics (1960), and The Ultimate Foundations of Economic Science (1962).
[33. ]It is different, perhaps, with agricultural productions which flourish only on relatively restricted soils; for example, coffee growing.
[1. ]How little the Social-Democrats have made this fundamental doctrine of Marxism their own, one sees from a glance at their literature. A leader of German Social-Democracy, the former German Minister of National Economy Wissell, confesses succinctly: “I am Socialist and shall remain Socialist, for I see in socialist economy, with its subordination of the Individual to the Whole, the expression of a higher moral principle than that which lies at the basis of individualistic economy.” Praktische Wirtschaftspolitik (Berlin, 1919), p. 53.
[2. ]Jodl, Geschichte der Ethik als philosophischer Wissenschaft, Vol. II, 2nd ed. (Stuttgart, 1921), p. 450.
[3. ]Izoulet, La cité moderne, pp. 413 ff.
[4. ]Guyau, Die englische Ethik der Gegenwart, trans. Peusner (Leipzig, 1914), p. 20.
[5. ]Bentham, Deontology or the Science of Morality, ed. Bowring (London, 1834), Vol. I, pp. 8 ff.
[6. ]Mill, Utilitarianism (London, 1863), pp. 5 ff.; Jodl, Geschichte der Ethik als philosophischer Wissenschaft, Vol. II, p. 36.
[7. ]Guyau, Sittlichkeit ohne “Pflicht,” pp. 272 ff.
[8. ]Fouillée, Humanitaires et libertaires au point de vue sociologique et moral, pp. 157 ff.
[9. ]Böhm-Bawerk, Kapital und Kapitalzins, 3rd ed., Part II (Innsbruck, 1909), pp. 233 ff. Publisher’s Note: This is pp. 135 ff. in Volume II of the English edition.
[10. ]Bentham, Deontology, Vol. I, p. 87 ff.
[11. ]Weber, Gesammelte Aufsätze zur Religionssoziologie (Tübingen, 1920), Vol. II, p. 206.
[12. ]Ibid., p. 211.
[13. ]Weber, op. cit., Vol. I, p. 262.
[14. ]Glaser, Die franziskanische Bewegung (Stuttgart and Berlin, 1903), pp. 53 ff., 59.
[15. ]Heichen, “Sozialismus und Ethik” in Die Neue Zeit, Vol. 38, Vol. l, pp. 312 ff. Specially remarkable in this context are also the remarks of Charles Gide, “Le Matérialisme et l’ Économie Politique” in Le Matérialisme actuel (Paris, 1924).
[16. ]The first fact known positively about Kaspar Hauser is that he appeared in Nuremberg in 1828 with a letter purporting to give some of his background. According to the letter, he had been found in 1812, when only a few months old, by a German laborer who had raised him. The boy said that he had been confined in a dark room all his life until he was sent forth into the world. In time he was placed in the care of the German poet and philosopher, Georg Friedrich Daumer (1800-1875). Hauser died in 1833 from a wound inflicted, he said, by a stranger who had promised information about his origin. Many myths and romances developed over the years as to Hauser’s true identity and ancestry (Pub.).
[17. ]Compare the characterization of the Eastern Church given by Harnack, Das Mönchtum, 7th ed. (Giessen, 19o7), p. 32 ff.
[18. ]John of Kronstadt (1821-1908), real name Ioann Sergiev, an orthodox Russian priest and popular idol, alleged performer of miracles, carried on charitable work and ministered to the poor, sick and needy.
[19. ]Harnack, Das Mönchtum, p. 33.
[20. ]Troeltsch, Gesammelte Schriften, Vol. II (Tübingen, 1913), pp. 386 ff.
[21. ]Harnack, Das Wesen des Christentums (Leipzig, 1907), pp. 50 ff.
[22. ]Mark, 1, 15.
[23. ]Luke, XXII, 30.
[24. ]Harnack, Aus Wissenschaft und Leben, Vol. II (Giessen, 1911), pp. 257 ff.; Troeltsch, Die Soziallehren der christlichen Kirchen und Gruppen, pp. 31 ff.
[25. ]Acts of the Apostles, IV, 35.
[26. ]Luke, XIV, 26.
[27. ]Pfleiderer, Das Urchristentum, Vol. I, pp. 649 ff.
[28. ]Luke, XII, 35-36.
[29. ]“The doctrine of the medieval law of trade is rooted in the canonic dogma of the barrenness of money and in the sum of corollaries which are to be understood under the name of the usury law. The history of the trade law of those times cannot be anything except the history of the rule of the doctrine of usury in legal doctrine.” Endemann, Studien in der romanisch-kanonistischen Wirtschafts-und Rechtslehre his gegen Ende des siebzehnten Jahrhunderts (Berlin, 1874-83), Vol. I, p. 2.
[30. ]Luke, VI, 35.
[31. ]C. 10. X. De usuris (III, 19). See Schaub, Der Kampf gegen den Zinswucher, ungerechten Preis und unlautern Handel im Mittelalter (Freiburg, 1905), pp. 61 ff.
[32. ]The passage is thus interpreted by Knies, Geld und Kredit, Part II (Berlin, 1876), pp. 333-5 note.
[33. ]On the latest legislation of the Church, which in c. 1543, Cod. iur. can., has come to acknowledge conditionally the legality of the taking of interest, see Zehentbauer, Das Zinsproblem nach Moral und Recht (Vienna, 1920), pp. 138 ff.
[34. ]Pesch, Lehrbuch der Nationalökonomie, pp. 212 ff.
[35. ]Matthew v, 27.
[36. ]Pesch, op. cit., p. 212.
[37. ]Pfleiderer, Das Urchristentum, Vol. I, p. 652, explains Jesus’ pessimistic judgment of earthly possessions by the apocalyptic expectation of the near world catastrophe. “Instead of trying to reinterpret and adapt His rigoristic expressions on this subject in the sense of our modern social ethics, one should make oneself familiar, once and for all, with the idea that Jesus did not appear as a rational moralist but as an enthusiastic prophet of the impending Kingdom of God and has only thus become the source of the religion of salvation. He who wants to make the eschatological enthusiasm of the prophet the direct and permanent authority for social ethics does just as wisely as he who would wish to warm his hearth and cook his soup with the flames of a volcano.” On May 25th, 1525, Luther wrote to the Danzig Council: “The Gospel is a spiritual law by which one cannot well govern.” See Neumann, Geschichte des Wuchers in Deutschland (Halle, 2865), p. 618. Also Traub, Ethik und Kapitalismus, 2nd ed. (Heilbronn, 2909), p. 71.
[38. ]Seipel, Die wirtschaftsethischen Lehren der Kirchenväter (Vienna, 3907), pp. 84 ff.
[39. ]Migne, Patrologiae Graecae, Vol. LX, pp. 96 ff.
[41. ]Engels, Ludwig Feuerbach und der Ausgang der klassischen deutschen Philosophie, 5th ed. (Stuttgart, 1910), p. 58.
[42. ]Cohen, Ethik des reinen Willens, Berlin, 1904, pp. 303 ff.
[43. ]Ibid., p. 304.
[44. ]“The direct purpose of capitalist production is not the production of goods but of surplus value, or of profit in its developed form; not of the product but of the surplus product.... In this view the workers themselves appear as what, in the capitalist production, they are—mere means of production, not ends in themselves, not purpose of production.” Marx, Theorien über den Mehrwert (Stuttgart, 1905), Part 2, pp. 333 ff. That the workers play a role in the economic process as consumers also, Marx never understood. Publisher’s Note: Only a part of the work by Marx, Theorien über den Mehrwert (Stuttgart, 1905) has been translated into English in the book titled Theories of Surplus Value: Selections, translated from the German by G. A. Bonner and Emile Burns (New York: International Publishers, 1952), 432 pp.
[45. ]Kant, Kritik der Urteilskraft (Works, Vol. VI), p. 265. Publisher’s Note: In English, Critique of Judgment. In Immanuel Kant, The Critique of Judgement. Part II. Critique of Teleological Judgement, trans. James Creed Meredith (Oxford: Clarendon Press, 1952).
[46. ]Cohen, Ethik des reinen Willens, p. 305. See also Steinthai, Allgemeine Ethik, pp. 266 ff.
[47. ]Art. 427 of the Treaty of Versailles and Art. 372 of the Treaty of Saint Germain.
[48. ]Cohen, Ethik des reinen Willens, p. 572.
[49. ]Ibid., p. 578.
[50. ]II Thessalonians, III, 10. On the letter not being Paul’s see Pfleiderer, Das Urchristentum, Vol. I, PP. 95 ff.
[51. ]Against this Paul, in the First Epistle to the Corinthians (IX, 6-24), favours on principle the Apostle’s claim to live at the cost of the congregation.
[52. ]Todt (Der radikale deutsche Sozialismus und die christliche Gesellschaft, 2nd ed. (Wittenberg, 2878), pp. 306—19, is a good example of how, out of this and similar passages, people try to justify from the New Testament modern catchwords of the anti-liberal movement.
[53. ]Kant, “Fragmente aus dem Nachlass,” Collected works, ed. Hartenstein, Vol. VIII (Leipzig, 1868), p. 622.
[54. ]This, for example, is also how Thomas Aquinas imagines it. See Schreiber, Die voikswirtschaftlichen Anschauungen der Scholastik seit Thomas yon Aquin (Jena, 1913), p. 18.
[55. ]Ruskin, Unto this last (Tauchnitz-Ed.), pp. 19 ff.; Steinbach, Erwerb und Beruf (Vienna, 1896), pp.13 ff.; Otto Conrad, Volkswirtschaftspolitik oder Erwerbspolitik? (Vienna, 1918), pp. 5 ff.; Tawney, The Acquisitive Society, p. 38.
[56. ]English economic history has destroyed the legend which taxed the rise of factory industry with having made the position of the working classes worse. See Hurt, “The Factory System of the Early 19th Century” in Economica, Vol. VI, 1926, p. 78 ff.; Clapham, An Economic History of Modern Britain, 2nd ec. (Cambridge, 1930), pp. 548 ff. Publisher’s Note: The Hutt article, “The Factory System of the Early 19th Century,” was reprinted in Capitalism and the Historians, ed. F. A. Hayek, essays by T. S. Ashton, L. M. Hacker, W. H. Hutt, B. de Jouvenel (Chicago: University of Chicago Press, 1954), pp. 160-188.
[57. ]“The central wrong of the Capitalist system is neither the poverty of the poor nor the riches of the rich: it is the power which the mere ownership of the instruments of production gives to a relatively small section of the community over the actions of their fellow-citizens and over the mental and physical environment of successive generations. Under such a system personal freedom becomes, for large masses of the people, little better than a mockery.... What the Socialist aims at is the substitution, for this Dictatorship of the Capitalist, of govermnet of the people by the people and for the people, in all the industries and services by which the people live.” Sidney and Beatrice Webb, A Constitution for the Socialist Commonwealth of Great Britain (London, 1920), pp. xiii ff. See also Cole, Guild Socialism Re-stated (London, 1920), pp. 12 ff.
[58. ]“The market is a democracy where every penny gives a right to vote.” Fetter, The Principles of Economics, pp. 394, 410. See also Schumpeter, Theorie der wirtschaftlichen Entwicklung (Leipzig, 1912), pp. 32 ff. Nothing is more topsy-turvy than a saying such as: “Who is less questioned at the building of a house in a large city than its future tenants?” Lenz, Macht unt Wirtshaft (Munich, 1915), p. 32. Every buider tries to build in a way that best suits the wishes of the future tenants, so that he may be able to let the buildings as quickly and profitably as possible. See also the striking remarks in Withers, The Case for Capitalism (London, 1920), pp. 41 ff.
[59. ]People overlook this entirely when, like the Webbs, A Constitution for the Socialist Commonwealth of Great Britain, p. xii, they say that the workers have to obey the orders “of irresponsible masters intent on their own pleasure or their own gain.”
[60. ]Messer, Ethik (Leipzig, 1918), pp. 111 ff.; Natorp, Sozialidealismus (Berlin, 1920), p. 13.
[61. ]Rathenau, Die neue Wirtschaft (Berlin, 1918), pp. 41 ff.; also the critique of Wiese, Freie Wirtschaft (Leipzig, 1918).
[62. ]See pp. 123 ff., 350 ff.
[1. ]See, for instance, in Das Kapital the remarks on Bentham: “the most homely platitude,” “only copied stupidly,” “trash,” “a genius of bourgeois stupidity,” op. cit., Vol. I, p. 573; on Malthus, “a schoolboyishly superficial and clerically stilted plagiarism,” Ibid., Vol. I, p. 580. Publisher’s Note: In the English edition of Marx, Capital, Volume I, these quotations appear on p. 668 (Bentham) and P. 675 n3 (Malthus).
[2. ]Thus Marxism finds it easy to ally with Islamic zealotism. Full of pride the Marxist Otto Bauer cries: “In Turkestan and Azerbaijan monuments to Marx stand opposite the mosques, and the Mullah in Persia mingles quotations from Marx with passages from the Koran when he calls the people to the Holy War against European Imperialism.” See Otto Bauer, “Marx als Mahnung” in Der Kampf, XVI, 1923, p. 83.
[3. ]See my Liberalismus (Jena, 1927). Publisher’s Note: In English as The Free and Prosperous Commonwealth: An Exposition of the Ideas of Classical Liberalism (Princeton: Van Nostrand, 1962).
[4. ]Cazamian, Le roman social en Angleterre, 1830-50 (Paris, 1904), pp. 267 ff.
[5. ]On the socialist tendency in painting see Muther, Geschichte der Malerei im 19. Jahrhundert (Munich, 1893), Vol. II. pp. 186 ff.; Coulin, Die sozialistische Weltanschauung in der franzöisischen Malerei (Leipzig, 1909), pp. 85 ff.
[6. ]Bentham, Principles of the Civil Code, pp. 304 ff.
[7. ]See the criticism of this legend by Hutt, Economica, Vol. VI, pp. 92 ff.
[8. ]This even Brentano has to admit, who otherwise boundlessly overvalues the effects of labour legislation. “The imperfect machine had replaced the family father with child labour ... the perfected machine makes the father again the nourisher of family and gives the child back to the school ... Grown-up workers are now needed again and only those can be used who, by their higher standard of living, are equal to the heightened claims of the machines.” Brentano, Über das Verkältnis von Arbeitslohn und Arbeitszeit zur Arbeitsleistung, 2nd ed. (Leipzig, 1893), p. 43.
[9. ]Brentano, Über das Verhältnis von Arbeitslohn und Arbeitszeit zur Arbeitsleistung, pp. 11, 23 ff.; Brentano, Arbeitszeit und Arbeitslohn nach dem Kriege (Jena, 1919), p. 10; Stucken, “Theorie der Lohnsteigerung” (Schmollers Jahrbuch, 45th year, pp. 1152 ff.).
[10. ]Die Inauguraladresse der Internationalen Arbeiterassoziation, ed. Kautsky (Stuttgart, 1922), p. 27.
[11. ]Engels, Die Lage der arbeitenden Klasse in England, 2nd ed. (Stuttgart, 1892), p. 178. Publisher’s Note: In English, The Condition of the Working Class in England in 1844, with a Preface written in 1892 (London, George Allen & Unwin, Ltd., 1892), p. 177.
[12. ]Ibid., p. 297. Publisher’s Note: In English edition, p. 295.
[13. ]Engels, “Die englische Zehnstundenbill” in Aus dem literarischen Nachlass von Karl Marx, Friedrich Engels und Ferdinand Lassalle, Vol. III (Stuttgart, 1902), p. 393.
[14. ]Liek, Der Arzt und seine Sendung, 4th ed. (Munich, 1927), p. 54; Liek, Die Schaden der sozialen Versicherung, 2nd ed. (Munich, 1928), pp. 17 ff., and a steadily growing mass of medical writings.
[15. ]The Kapp Putsch (March 13, 1920) was both symptom and product of the post World War I revolutionary turmoil in Germany. Gustav Noske’s (1868-1946) new army, organized by the post-war Majority Socialist government to crush the left, revolted against the government and Wolfgang Kapp (1868-1922), founder of the Fatherland Party, was placed in office. Karl Legien (1861-1920) leader of the right wing German trade unions, then called a general strike. Response to this rightwing move was tremendous and the Putsch promptly collapsed. The two competing Socialist Parties then came to terms and formed a coalition administration in April 1920, which excluded the extreme leftists and Communists from political power (Pub.).
[16. ]The speech, translated into German, has been published by Bernstein under the title Lohn, Preis und Profit. I quote from the third edition, which appeared in Frankfurt in 1910. Publisher’s Note: The speech by Marx was published originally in English as Value, Price and Profit, ed. Eleanor Marx Aveling (Chicago: Charles H. Kerr & Co., 1910).
[17. ]Ibid., p. 46. Publisher’s Note: In English edition, pp. 126-128.
[18. ]Adolf Weber, Der Kampf zwischen Kapital und Arbeit, 3rd and 4th eds. (Tüyingen, 1921), pp. 384 ff.; Robbins, Wages (London, 1926), pp. 58 ff.; Hutt, The Theory of Collective Bargaining (London, 1930), pp. 1 ff.; also my Kritik des Interventionismus (Jena, 1929), pp. 12 ff.; 79 ff.; 133 ff. Publisher’s Note: Hutt’s The Theory of Collective Bargaining was reprinted in 1954 by the Free Press of Glencoe, Illinois. Preface to the American edition is by Ludwig von Mises. Please also note that in the English edition of Mises’ A Critique of Interventionism, the page references are pp. 26 ff., 95 ff., and 148 ff., respectively.
[19. ]Kautsky, quoted by Dietzel, “Ausbeutung der Arbeiterklasse durch Arbeitergruppen” (Deutsche Atbeit, vol. 4, 1929), PP. 145 ff.
[20. ]Technische Nothilfe, established September 1919 to help provide essential services during strikes, lock-outs and natural cataclysms. A voluntary politically neutral association, under the German Ministry of Interior, with 260,000 members in 1928, converted into a public agency in 1939, dissolved by the Allied Occupational Forces in 1945, then replaced by a government institution, Technisches Hilfswerk, in 1953 to give assistance during catastrophes (Pub.).
[21. ]Millar, “The Evils of State Trading as Illustrated by the Post Office” in A Plea for Liberty, ed. Mackay, 2nd ed. (London, 1891), pp. 305 ff.
[22. ]Goldscheid, Staatssozialismus oder Staatskapitalismus (Vienna, 1917); Sozialisierung der Wirtschaft oder Staatsbankerott (Vienna, 1919); against: Schumpeter, Die Krise des Steuerstaates (Graz and Leipzig, 1918).
[23. ]On the negative attitude of the liberals to the idea of progressive taxes see Thiers, De la Propriété(Paris, 1848), pp. 352 ff.
[24. ]See my Nation, Staat und Wirtschaft, pp. 134 ff.
[25. ]Mengelberg, Die Finanzpolitik der sozialdemokratischen Partei in ihren Zusammenhängen mit dem sozialistischen Staatsgedanken (Mannheim, 1919), pp. 30 ff.
[26. ]Marx-Engels, Gesammelte Schriften, 1852-62 (Collected Writings, 1852-62), ed. Rjasanoff (Stuttgart,1917), Vol. I, p. 127.
[27. ]See my Nation, Staat und Wirtschaft, pp. 129 ff.
[28. ]See my Theory of Money and Credit (London, 1934), pp. 339 ff.; also my Geldwertstabilisierung und Konjunkturpolitik (Jena, 1928), pp. 43 ff. Publisher’s Note: Mises’ Theory of Money and Credit has been reprinted since the 1934 edition cited here (Yale, 1953), (FEE, 1971), and (Liberty Press, 1981). Mises’ Geldwertstabilisierung und Konjunkturpolitik is included in the anthology, On the Manipulation of Money and Credit, edited by Percy L. Greaves, Jr., translated by Bettina Bien Graves, under the title “Monetary Stabilization and Cyclical Policy,” pp. 57-171. This particular citation is to pp. 118 ff. of the English translation.
[29. ]For a criticism of National Socialist doctrine see my Kritik des Interventionismus (Jena, 1929), pp. 91 ff.; also Karl Wagner, “Brechung der Zinsknechtschaft?” in Jahrbücher für Nationalökonomie und Statistik, Third Series, Vol. LXXIX, pp. 790 ff. Publisher’s Note: In the English edition of Kritik des Interventionismus, p. 107.
[31. ]Thus by Kautsky, quoted by Georg Adler, Grundlagen der Karl Marxschen Kritik der bestehenden Volkswirtschaft (Tübingen, 1887), p. 511
[32. ]“Beaucoup d’ouvriers, et non les meilleurs, préférent le travail payé à la journée au travail à tache. Beaucoup d’entrepreneurs, et non les meilleurs, préféraient les conditions qu’ils espèrent pouvoir obtenir d’u,i État socialiste à celles que leur fait un régime de libre concurrence. Sous ce régime les entrepreneurs sont des ’fonctionnaires’ payés a la tâche; avec une organisation socialiste ils déviendraient des ’fonctionnaires’ payés à la journée.” (Many workers, and not the best, prefer to be paid by the day and not by the work completed. Many entrepreneurs, and not the best, prefer what they can hope to obtain from a socialist state to that which a free competitive system would award them. Under such a competitive system, entrepreneurs are the “officials” paid for the work completed; under a socialist organization, they would become “officials” paid by the day.) Pareto, Cours d’Economie Politique, Vol. II, p. 97n.
[33. ]Hutt, The Theory of Collective Bargaining, pp. 25 ff.
[34. ]The Junker is not concerned with the maintenance of private property as disposal over the means of production, but rather with maintaining it as title to a special source of income. Therefore State Socialism has easily won him over. It is to secure him his privileged income.
[35. ]This, for example, was Bismarck’s view. See his speech in the Landtag of June 15th, 1847 in Fürst Bismarcks Reden, edited by Stein, Vol. I, p. 24.
[36. ]Cathrein, Der Sozialismus, 12th and 13th eds. (Freiburg, 1920), pp. 347 ff.
[37. ]MacIver, Community, London, 1924, pp. 79 ff.
[38. ]This, of course, is true also of the German nation. Almost the whole intelligentsia of Germany is socialistic: in national circles it is State or, as one usually says today, National Socialism, in Catholic circles, Church Socialism, in other circles, Social-Democracy or Bolshevism.
[39. ]Johann Bockelson (also spelled Beukelsz, Boockelszoon, Buckholdt or Bockholdt) (c. 1508-1535) was better known as John of Leiden. He and Bernt Knipperdolling (also Bernhardt or Berend Knipperdollinck) (c. 1490-1536) were both Dutch and followers of the Anabaptist Jan, or Johann Matthysz (also Matthisson or Matthyszoon). In 1533 the Anabaptists took over Munster. Bockelson became burgomaster. A charismatic fanatic, Bockelson often engaged in wild excesses, even beheading one of his four wives himself in a fit of frenzy. Anabaptist-held Munster was besieged and Matthysz was killed in 1534. Bockelson succeeded him as “prophet.” Knipperdolling, at first a rival of Bockelson’s, became an abject follower. Munster was taken from the Anabaptists in 1535. Both Bockelson and Knipperdolling were then cruelly executed (Pub.).
[40. ]Freud, Totem und Tabu (Vienna, 1913), pp. 62 ff. Publisher’s Note: In English, “Totem and Taboo,” in The Standard Edition of The Complete Psychological Works of Sigmund Freud (London: Hogarth; New York: Macmillan, 1953).
[41. ]Archiv für Sozialwissenschaft, Vol. LI, pp. 490-95. Publisher’s Note: The article Mises cites here is his “Neue Beiträge Zum Problem der sozialistischen Wirtschaftsrechnung.”
[42. ]Ibid., Vol. XLIX, pp. 377-420.
[43. ]Ibid., pp. 378 and 419.
[44. ]Archiv für Sozialwissenschaft, Vol. XLIX, p. 404.
[45. ]Ibid., p. 404 n20.
[46. ]Heimann, Mehrwert und Gemeinwirtschaft, kritische und positive Beiträge zur Theorie des Sozialismus (Berlin, 1922).
[47. ]Max Weber, Wirtschaft und Gesellschaft, op. cit., pp. 45-9.
[48. ]Heimann, op. cit., pp. 184 ff.
[49. ]Ibid., p. 174.
[50. ]Heimann, op. cit., p. 185.
[51. ]Ibid., pp. 188 ff.
[52. ]Sidney Webb in Fabian Essays in Socialism, first published in 1889 (American edition, New York, 1891, p. 4).
[53. ]Cf. G. M. Trevelyan, A Shortened History of England (London, 1942), p. 510.
[54. ]Elmer Roberts, Monarchical Socialism in Germany (New York, 1913).
[55. ]Zwang means compulsion, Wirtschaft means economy. The English language equivalent for Zwangswirtschaft is something like compulsory economy.
[56. ]Wesley C. Mitchell, “The Social Sciences and National Planning” in Planned Society, ed. Findlay Mackenzie (New York, 1937), p. 112
[57. ]Laski, Democracy in Crisis (Chapel Hill, 1933), pp. 87-8.
[58. ]Sidney and Beatrice Webb, Soviet Communism: A New Civilization? (New York, 1936), Vol. II, pp. 1038-39.
[59. ]T. G. Crowther, Social Relations of Science (London, 1941), p. 333.
[60. ]The collection of these conventions, published by The International Labour Office under the title Intergovernmental Commodity Control Agreements (Montreal, 1943).
[61. ]Marx, Das Kapital, 7th ed. (Hamburg, 1914), Vol. I, p. 728. Publisher’s Note: In English edition, p. 836.
[62. ]Marx, Zur Kritik der politischen Ökonomie, ed. Kautsky (Stuttgart, 1897), p. xi. Publisher’s Note: In English edition by Kerr, pp. 11-12; by Eastman, p. 10.
[63. ]Ibid., p. xii. Publisher’s Note: In English edition by Kerr, p. 12; by Eastman, p. 11.
[64. ]Marx, Der Bürgerkrieg in Frankreich, ed. Pfemfert (Berlin, 1919), passim. Publisher’s Note: In English, “The Civil War in France.” Reprinted in Eastman anthology, pp. 367-429.
[65. ]Marx, Value, Price and Profit, ed. Eleanor Marx Aveling (New York, 1901), pp. 72-74.
[66. ]Blueprint for World Conquest as Outlined by the Communist International, Human Events (Washington and Chicago, 1946), pp. 181-82.
[67. ]David J. Dallin, The Real Soviet Russia (Yale University Press, 1944), pp. 88-95.
[68. ]Pius XII (pope, 1939-1958) (Pub.).
[69. ]Christmas Eve broadcast, New York Times, December 25, 1941.
[70. ]The annexation of Carpatho-Russia utterly explodes their hypocritical indignation about the Munich agreements of 1938.
[71. ]The Hölz riot was a communist uprising in Germany (March 1921 in Mansfeldischen), led by World War I veteran Max Hölz (1889-1933). Hölz was sentenced to life imprisonment as a result, granted amnesty in 1928, and then left Germany for the Soviet Union (Pub.)
[72. ]Mises, Bureaucracy (Yale University Press, 1944).
[73. ]Benda, La trahison des clercs (Paris, x927). Publisher’s Note: In English, The Treason of the Intellectuals (New York: William Morrow, 1928) and The Betrayal of the Intellectuals (Boston: Beacon Press, 1955)
[74. ]Stahlhelm was an association of German World War veterans, established 1918. Cagoulards were members of a secret French extreme rightist, terrorist organization, the Cagoule. It was responsible for several assassinations of socialists and Italian anti-fascists and it collaborated with the Nazis and the French Vichy government during WWII (Pub.).
[75. ]This programme is reprinted in English in Count Carlo Sforza’s book, Contemporary Italy, translated by Drake and Denise de Kay (New York, 1944), pp. 295-6.
[76. ]For instance Mario Palmieri, The Philosophy of Fascism (Chicago, 1936), p. 248.
[77. ]Sombart, Das Lebenswerk yon Karl Marx (Jena, 1909), p. 3.
[78. ]Sombart, A New Social Philosophy, trans. and ed. K. F. Geiser (Princeton University Press, 1937), p. 194.
[79. ]The devastating critique of eugenics by H. S. Jennings, The Biological Basis of Human Nature (New York, 1930), pp. 223-52.
[80. ]Marx, Der Bürgerkrieg in Frankreich, ed. Pfemfert (Berlin, 1919), p. 54. Publisher’s Note: In English, “The Civil War in France,” p. 408.
[81. ]Hayek, Individualism and the Economic Order (Chicago University Press, 1948), pp. 89-91.
[82. ]Quoted by Hayek, The Road to Serfdom (1944), Chapter IX, p. 119.