Delphi Complete Works of Stephen Leacock, page 454
We come finally to the scheme of industrial organization that may be described as socialism proper, in opposition to communism and collectivism. In this case wages are to be awarded to each laborer according to his efficiency. The plan supposes a hierarchy of officials (on the elective principle) who control the productive process, drafting the workers from trade to trade as may be needed, and paying salaries, making promotions, etc., according to the industrial efficiency of the workers. The pay of a good workman would be high, of an inefficient or idle workman low. The scheme would be almost perfect, if one could assume the official persons who assign places, salaries, and promotions to be omniscient and impeccable. But the possibilities of corruption, the play of interested motives, intrigue, personal spite, and unfairness of all kinds would be so appalling under present conditions of public morality as to altogether remove such suggestions from the domain of the practicable. If all industry were forcibly appropriated by the government and private business prohibited, the individual who fell under the odium of the “bosses” and “cliques” that might very possibly control such a government, would feel himself to be under a despotism from which the organization offered no escape.
3. The German Social Democrats. Socialism, however, has more than a merely theoretical aspect. On the continent of Europe it has made itself a force in practical politics of the highest importance, and socialist political parties have of late assumed some importance in England and the United States. But it is in Germany especially that the socialist propaganda has met with success, and has exercised a powerful influence on the legislative policy of the government. The evolution of socialism in Germany is not only interesting of itself, but is singularly instructive in the light it throws upon the probable future of socialist political parties, and the extent to which they are likely to succeed in modifying the attitude of existing governments. It arose, as also in France, in the earlier part of the nineteenth century, assuming at first an altogether ideal and Utopian form. The earlier socialists, or communists as they were at first called, greatly underestimated the enormous difficulties that stand in the path of social reform. Attributing all existing evils to the prevalence of the capitalistic system, they presumed that its immediate abolition in favor of state control would effect an almost immediate regeneration of mankind. The original programme of socialism, when it arrived at the stage of having a political programme, consisted in the uncompromising destruction of capitalistic industry. This was the attitude of the socialist wing of the revolutionists that for the time being overthrew monarchical government in France in 1848, and threatened its existence in the German convulsions of the same year. After the collapse of that great movement the German socialists fell into opposing groups, — some of them still aiming at a general universal revolution, and attempting to organize on a cosmopolitan basis, others recognizing the present national state as their starting-point, and desirous of gaining their ends by constitutional reform. By the latter plan socialism, instead of fighting itself into power, would vote itself into power. The greatest influence during this period was exercised by Ferdinand Lassalle, who organized a German Workingmen’s Association, and advanced as an immediate programme the use of state credit for the foundation of workingmen’s productive associations, which should act as the beginning of a socialist state. The secession of the revolutionary anarchists, the collapse of the international aspect of the movement, aided the growing tendency of German socialism towards a national constitutional form whose immediate aim should be the attainment of practical measures, rather than the complete realization of the ideal state. At a congress at Gotha in 1875, a general union of the socialist party was effected on a basis of compromise. In the programme there adopted the “abolition of the system of wage labor” was indicated as the ideal of socialism, but certain immediate measures were proposed “in order to prepare the way for the solution of the social question.”
In the period following (1878-1890) the party underwent a severe persecution at the hands of the German imperial government, which did not, however, drive it into revolutionary measures. At a congress held at Erfurt (1891) a revised platform was adopted, which became the official programme of the German social democratic party. It demands universal, equal, and direct suffrage by ballot (extending the franchise to women), proportional representation, direct legislation, substitution of a universal militia for a standing army, freedom of the press and of meeting, free justice, a graduated income tax, improved factory legislation, statutory limitations of the hours of labor. With these immediate demands are coupled a general denunciation of the evils of capitalistic industry. But it is asserted that the “struggle of the working classes against capitalistic exploitation must of necessity be a political struggle,” and it will be seen that the present demands of the party include nothing that is not asked by various radical groups in Anglo-Saxon countries, except perhaps the item of a legal labor day. On this basis the progress of the Social Democrats in point of numbers has been extremely rapid. At the foundation of the German Empire they elected only two members to the Reichstag; in 1893 they elected forty-four members, representing 1,876,738 votes, and in the election of 1903 succeeded in returning eighty-one members, representing 3,011,114 votes. On the other hand it is generally conceded that the socialist party (including therein those who vote for socialist candidates) is not entirely made up of socialists. It has become to a large extent the party of discontent and of standing opposition to the imperial government, and is by no means to be looked upon as entirely made up of persons believing in the practicability of a coöperative state.
In all the Continental countries one of the vexed questions of present socialism is the extent to which the earlier doctrines of the socialistic theory are to be maintained. Some of the socialists tenaciously adhere to the original tenets of Karl Marx, and persist in believing in the imminence of the social cataclysm. This, however, in view of the evident improvement in the lot of the working classes during the nineteenth century, during which the actual wages of skilled labor have been about doubled, is an expectation that seems belied. A great many socialists believe in the progressive alteration of present conditions with a view to immediate social amelioration to the extent actually practicable. These “revisionists,” as they are called, were voted down at the recent international congress of socialists at Amsterdam (1904), and a set of resolutions adopted reaffirming the inveterate hostility of the socialists to the system of capitalistic production. But in spite of this it may with authority be affirmed that the greater number of socialists now favor the amelioration of present conditions rather than their complete overthrow. The socialists, though extremely numerous in France and Italy, have nowhere else as much cohesion and unity of operation as in Germany. In France in particular they are divided into opposing factions. Some of them, under the name of “collectivists,” are of the Marxian type, favoring a complete economic control exercised by a centralized government; others advocate the adoption of a socialistic programme by the development of municipal control; others again, the “possibilists,” are inclined to accept any measures of amelioration that can be obtained and to coöperate with any existing governments that will meet their views.
4. Socialism in England and America. Various socialistic associations have been formed in England, — the Social Democratic Federation (1881), the Socialist League (1884), now extinct, and the Fabian Society. The latter has contained among its members many persons of marked talent, — the two Webbs, Mrs. Annie Besant, and others, — and the collection of papers published by it under the title of “Fabian Essays in Socialism” has had an extensive sale. The programme of the society consists in the gradual introduction of socialism, recognizing the need of a transitional stage in passing from capitalistic industry to collective management. In the United States there have been numerous examples of practical attempts at the realization of collective management in the foundation of various communities in which the principle of associated labor and common ownership was adopted. Of these the Rappites of New Harmony (later of Economy) and the communists of Zoar, Amana, and Oneida are familiar examples. These experiments have always proved failures, except where the main motive was religious and not economic, and where the community of property was only incidental to aspirations of a higher character. Of late years socialism has appeared in the United States in the form of political parties which are developing a considerable voting power. The Socialist Labor party and the Social Democratic party are the most important. In the presidential elections of 1904 some 600,000 votes were given to socialist candidates. But in the case of both these parties, though they preface their platforms with general statements in favor of the nationalization of production, special stress is laid on the immediate demands for state railroads, municipal control of lighting plants and street cars, a graduated income tax, etc. They thus illustrate in their practical programme a very close similarity with radical political parties whose basis is not socialistic. The present demands of socialist parties both in America and in Europe are very closely allied to those advanced by the Populists, the French Radicals, and the British Independent Labor party. The fundamental basis of radicalism is individualistic and hence represents in theory the opposing extreme from the socialistic conception of the state. But the progressive evolution of modern socialism is carrying it further and further from its original ideal. The latter many socialists admit to be utopian and unattainable, and many persons not socialists would concede that the theoretical ideal of a coöperative commonwealth may exercise a formative influence on the direction of actual legislation. The aims of the socialists in connection with municipal government we shall discuss in the next chapter.
READINGS SUGGESTED
Kirkup, T., History of Socialism (1892), chaps. i, vii, xii.
Ely, R., Socialism and Social Reform, part i (1894).
Schäffle, A., Quintessence of Socialism (translation of 8th German edition, 1889).
FURTHER AUTHORITIES
Bliss, W. D. P., Handbook of Socialism.
Rae, J., Contemporary Socialism (2d edition, 1891).
Ely, R., French and German Socialism (1883).
Bellamy, E., Looking Backward (1890).
Marx, K., Capital (1867).
Webb, S. and B., History of Trade-Unionism.
Nordhoff, C., Communistic Societies of the United States (1878).
Pöhlmann, R., Geschichte des antiken Kommunismus und Sozialismus (1893).
Schäffle, A., Impossibility of Social Democracy. (Authorized English edition, 1892).
Zenker, E. V., Anarchism (1897).
CHAPTER III. THE MODERN STATE
1. THE NEW Environment. — 2. Theory of Protection to Industry. — 3. Modern Protective Tariffs. — 4. Interference with Competitive Prices; Trust and Railroad Legislation. — 5. Government Interference on Behalf of the Working Class; Factory Laws, State Insurance, and Pensions. — 6. Municipal Control.
1. The New Environment. We shall now consider in conclusion the actual functions exercised by modern governments and the existing state of opinion in reference to the economic duties of the state. The practical operation of all modern civilized governments remains, in a certain sense, on an individualistic basis. By this is meant that there is no state in which the principle of common property in the means of production, or of equality of wages, or of universal employment by the government, is adopted. Each individual is still left to earn his own living by his own efforts, and the amount of wages remains as a matter of free contract between employers and employed. But subject to this general reservation, it can easily be shown that the practice of modern governments is further than ever removed from complete individualism, and that the tendency towards state interference with industry is everywhere on the increase. We have but to consider the public policy of our time in reference to the regulation of railroads, of monopolies and tariffs, to realize that the former reliance upon the principle of unrestricted competition and individual self-interest has been completely lost. This obvious change in public policy has been accompanied by an equally evident change in public opinion. The economists and political philosophers of the present time are prepared to defend a degree of state interference quite at variance with the doctrines of their predecessors. The reason for this remarkable alteration both in theory and practice is found in the altered circumstances of our industrial environment. We have seen in a previous chapter that the rapid expansion of industry under the stimulus of the new mechanical processes of the industrial revolution seems to demand its liberation from all forms of governmental restraint, and that the consequent removal of the standing impediments to the free movement of capital and labor was accompanied, at any rate as far as the total volume of production was concerned, with marked success. But it has been seen also that in reference to the welfare of the laboring class the system of free competition, particularly in regard to the work of women and children, was open to serious objection. The further development of modern industry has emphasized many other disadvantages attendant upon unrestricted competition. The more important of these may be briefly discussed in theoretical form, after which we shall proceed to the treatment of the actual legislative policy adopted under the circumstances.
The theory of government functions laid down by Smith, Ricardo, and the classical economists was essentially a cosmopolitan theory. It was intended to show that if wages, prices, and trade were left to the free play of individual bargaining, the self-interest of each would promote the general interest of all. Each individual would be enabled to apply his labor and his capital to the particular branch of industry in which he might expect the highest remuneration. In the same way each nation would be enabled to concentrate its production in the directions for which it had the greatest natural advantages, an unrestricted trade with its fellow nations supplying the commodities not produced at home. As applied to the conditions prevalent in England in Ricardo’s day, the theory of international relations is generally admitted to have been correct. There could be no doubt as to England’s paramount advantages at that time in nearly all lines of manufacturing industry. But the attempt to apply the free-trade theory to other nations and to later times has by no means met with a general acceptance. In the first place it is objected that the acceptance of the policy of free trade militates against national self-sufficiency and independence. In strict accord with the Ricardian doctrine it will follow that if a nation has especial advantages for agriculture and relatively poor facilities for manufacture it will, apart from government interference with the “natural” course of things, rely upon its neighbors for manufactured articles, and devote its energies mainly to agriculture. Conversely a nation with special facilities for manufacture, but poor in agricultural resources, will be led to leave its land untilled and to obtain its food-supply by exchanging its manufactured articles for agricultural products. It is clear that in these cases the welfare of each nation is absolutely dependent on its being able to carry on an uninterrupted trade for the supply of its particular needs. Should such intercourse be interrupted by war, either between itself and the nation it trades with or between the latter and an outside power, its economic existence is at stake. The economic gain afforded by its trade in time of peace is thus offset by its economic feebleness in time of war. It is to be especially observed that it is not only a war of its own that it must apprehend, but a war undertaken by an outside nation on which it is in some degree economically dependent. On this ground it is argued that state interference in the shape of protection to manufactures (or to agriculture) is justified in so far as may be needed for establishing a proper quantity of economic independence. Even Adam Smith in his approval of the navigation acts admits the validity of considerations of a similar character, and the argument is generally admitted by present economists to be of weight. There is a considerable divergence of opinion as to the extent to which economic independence should be attempted. It is, however, universally admitted that for the manufacture of the munitions of war no state should permit itself to be dependent on the outside world.
2. Theory of Protection to Industry. The foregoing is only one of the many grounds on which state interference in the form of protective duties has been advocated. More familiar, especially in America, is the line of reasoning known as the “infant industry” argument. It is claimed that the resources and circumstances of a country may be such that while the initial expense of setting a manufacturing system on foot in the face of foreign competition offers insuperable difficulties for the industrial producer, yet such a system once properly established would be of a sufficiently profitable character to compete on equal terms with the imports of foreign manufactures. In this case, it is urged, the government should impose a temporary duty which may make it possible for manufactures to be established, and which may later on be removed. The temporary help thus afforded by state interference will enable the community to advance to a higher stage of industrialism, and better to exploit the natural resources of its territory. This argument has met with especial support from American economists. The weak point in connection with the infant-industry argument is that in countries where duties of this kind have been adopted, the industries in question have never outgrown their infancy, as far as the protective tariff is concerned. In practice the duties have not only not been removed but have been increased.
A further ground of argument in favor of protective interference arises out of the cosmopolitan character of the free-trade doctrine. Assuming a complete international régime of free trade, the system might tend towards the denudation and impoverishment of the less favored nations in favor of those possessing the greatest resources and offering the best conditions for manufacture. The Ricardian theory presupposes that each nation will occupy itself with the pursuits for which its circumstances are best suited. It is admitted that one nation may be worse suited in every respect than another and yet continue to trade with it, because the people of the most favored nation will prefer to devote themselves to the occupation in which their advantage is greatest. Thus let us suppose that Portugal can produce both wine and corn with less labor than Morocco; and let it also be supposed that in the production of corn the advantage is but slight, whereas in the case of wine the advantage is enormous; the people of Portugal will still prefer to get their corn from Morocco, although produced there at greater pains than in Portugal, because the quantity of wine they exchange for it is produced at still less cost. On this ground the classical economists undertook to show that two nations might trade with mutual advantage even where the resources of the one were superior in every respect to those of the other. Such an argument however takes it for granted that the capital and labor of each country will remain within its own borders, and not emigrate to the more favored territory. Why should it not be supposed that with free intercourse and open markets, the capital, and what is far more important, the laborers of less favored communities would emigrate to places better suited for manufacture? It will be noted that this supposed denudation of poorer countries contains nothing at variance with the free-trade theory itself. The emigration of persons and capital under these circumstances would doubtless increase the gross total of the world’s production, and would add something to the general productive efficiency of mankind. But it would assuredly not increase the gross total of the productiveness of the country out of which they emigrated. The question then is, whether the adoption of protective duties in aid of home manufacture can prevent the desertion of poorer for richer countries. It may be argued that, even after the duties are imposed, the individual capitalist or laborer will still find it more profitable to use his capital and labor in the more favored country, and that the tendency to emigration of both of these is independent of protective interference. There are, however, a great many people in every country whose remaining there is not altogether a matter governed by economic motives; some will remain from sentimental reasons of attachment and patriotism, others because their material fortunes are already amply sufficient. Under a protective system the manufactured commodities consumed by these persons must needs be made at home and necessitate the continuing within the state of a sufficient manufacturing population for the purpose. Such manufacture will, under these premises, be conducted at an economic loss: the persons of means thus residing in the country will have to pay more for what they consume than if content to import it from abroad and to let the manufacturing population depart. But the upshot will be that a larger number of citizens remain within the state than would have remained without the state interference in the form of protective duties. It is plain, of course, that the applicability of such an argument depends on the particular circumstances of any country at any time. The situation of Great Britain at the present time naturally suggests itself for examination in this connection. It may conceivably be the case that the facilities both for agriculture and for manufacture are now inferior in Great Britain to those of the United States. The progressive application of water power and electricity as motive forces may further emphasize this advantage. Under such circumstances according to the Ricardian doctrine the laboring people of England ought, each consulting his own advantage, to come to live in the United States. There would remain in England the persons of means, who would invest their capital in the manufacturing industries of America, and draw from that continent the various commodities of their consumption. The case is purely hypothetical and may be perfectly at variance with present facts. But it seems to show that, in pure theory, the system of free trade is not of necessity identical with national greatness. To grant this and to contend that it is always consistent with the general welfare of the world, even where fatal to the welfare of a particular nation as such, would be thought by many a quite insufficient argument.
