Table of Contents
PART I LIBERALISM AND SOCIALISM
1 The State and Economic Activity
It is the aim of Socialism to transfer the means of production from private ownership
to the ownership of organized society, to the State. The socialistic State owns
all material factors of production and thus directs it. This transfer need not be
carried out with due observance of the formalities elaborated for property transfers
according to the law set up in the historical epoch which is based on private property
in the means of production. Still less important in such a process of transfer is
the traditional terminology of Law. Ownership is power of disposal, and when this
power of disposal is divorced from its traditional name and handed over to a legal
institution which bears a new name, the old terminology is essentially unimportant
in the matter. Not the word but the thing must be considered. Limitation of the
rights of owners as well as formal transference is a means of socialization. If
the State takes the power of disposal from the owner piecemeal, by extending its
influence over production; if its power to determine what direction production shall
take and what kind of production there shall be, is increased, then the owner is
left at last with nothing except the empty name of ownership, and property has passed
into the hands of the State.
People often fail to perceive the fundamental difference between the liberal and
the anarchistic idea. Anarchism rejects all coercive social organizations, and repudiates
coercion as a social technique. It wishes in fact to abolish the State and the legal
order, because it believes that society could do better without them. It does not
fear anarchical disorder because it believes that without compulsion men would unite
for social co-operation and would behave in the manner that social life demands.
Anarchism as such is neither liberal nor socialistic: it moves on a different plane
from either. Whoever denies the basic idea of Anarchism, whoever denies that it
is or ever will be possible to unite men without coercion under a binding legal
order for peaceful co-operation, will, whether liberal or socialist, repudiate anarchistic
ideals. All liberal and socialist theories based on a strict logical connection
of ideas have constructed their systems with due regard to coercion, utterly rejecting
Anarchism. Both recognize the necessity of the legal order, though for neither is
it the same in content and extent. Liberalism does not contest the need of a legal
order when it restricts the field of State activity, and certainly does not regard
the State as an evil, or as a necessary evil. Its attitude to the problem of ownership
and not its dislike of the "person" of the State is the characteristic of the liberal
view of the problem of the State. Since it desires private ownership in the means
of production it must, logically, reject all that conflicts with this ideal. As
for Socialism, as soon as it has turned fundamentally from Anarchism, it must necessarily
try to extend the field controlled by the compulsory order of the State, for its
explicit aim is to abolish the "anarchy of production." Far from abolishing State
and compulsion it seeks to extend governmental action to a field which Liberalism
would leave free. Socialistic writers, especially those who recommend Socialism
for ethical reasons, like to say that in a socialistic society public welfare would
be the foremost aim of the State, whereas Liberalism considers only the interests
of a particular class. Now one can only judge of the value of a social form of organization,
liberal or socialistic, when a thorough investigation has provided a clear picture
of what it achieves. But that Socialism alone has the public welfare in view can
at once be denied. Liberalism champions private property in the means of production
because it expects a higher standard of living from such an economic organization,
not because it wishes to help the owners. In the liberal economic system more would
be produced than in the socialistic. The surplus would not benefit only the owners.
According to Liberalism therefore, to combat the errors of Socialism is by no means
the particular interest of the rich. It concerns even the poorest, who would be
injured just as much by Socialism. Whether or not one accepts this, to impute a
narrow class interest to Liberalism is erroneous. The systems, in fact, differ not
in their aims but in the means by which they wish to pursue them.
2 The "Fundamental Rights" of Socialist Theory
The programme of the liberal philosophy of the State was summarized in a number
of points which were put forward as the demands of natural law. These are the Rights
of Man and of Citizens, which formed the subject of the wars of liberation in the
eighteenth and nineteenth centuries. They are written in brass in the constitutional
laws composed under the influence of the political movements of this time. Even
supporters of Liberalism might well ask themselves whether this is their appropriate
place, for in form and diction they are not so much legal principles—fit subject
matter for a law of practical life—as a political programme to be followed in legislation
and administration. At any rate it is obviously insufficient to include them ceremoniously
in the fundamental laws of states and constitutions; their spirit must permeate
the whole State. Little benefit the citizen of Austria has had from the fact that
the Fundamental Law of the State gave him the right "to express his opinion freely
by word, writing, print, or pictorial representation within the legal limits." These
legal limits prevented the free expression of opinion as much as if that Fundamental
Law had never been laid down. England has no Fundamental Right of the free expression
of opinion; nevertheless in England speech and press are really free because the
spirit which expresses itself in the principle of the freedom of thought permeates
all English legislation.
In imitation of these political Fundamental Rights some antiliberal writers have
tried to establish basic economic rights. Here their aim is twofold: on the one
hand they wish to show the insufficiency of a social order which does not guarantee
even these alleged natural Rights of Man; on the other hand they wish to create
a few easily remembered, effective slogans to serve as propaganda for their ideas.
The view that it might be sufficient to establish these basic rights legally in
order to establish a social order corresponding to the ideals they express, is usually
far from the minds of their authors. The majority indeed, especially in recent years,
are convinced that they can get what they want only by the socialization of the
means of production. The economic basic rights were elaborated only to show what
requirements a social order had to satisfy, a critique rather than a programme.
Considered from this point of view they give us an insight into what, according
to the opinion of its advocates, Socialism should achieve.
According to Anton Menger, Socialism usually assumes three economic basic rights—the
right to the full produce of labour, the right to existence, and the right to work.
All production demands the co-operation of the material and personal factors of
production: it is the purposeful union of land, capital, and labour. How much each
of these has contributed physically to the result of production cannot be ascertained.
How much of the value of the product is to be attributed to the separate factors
is a question which is answered daily and hourly by buyers and sellers on the market,
though the scientific explanation of this process has achieved satisfactory results
only in very recent years, and these results are still far from final. The formation
of market prices for all factors of production attributes to each a weight that
corresponds to its part in production. Each factor receives in the price the yield
of its collaboration. The labourer receives in wages the full produce of his labour.
In the light of the subjective theory of value therefore that particular demand
of Socialism appears quite absurd. But to the layman it is not so. The habit of
speech with which it is expressed derives from the view that value comes from labour
alone. Whoever takes this view of value will see in the demand for the abolition
of private ownership in the means of production a demand for the full produce of
labour for the labourer. At first it is a negative demand—exclusion of all income
not based on labour. But as soon as one proceeds to construct a system on this principle
insurmountable obstacles arise, difficulties which are the consequence of the untenable
theories of the formation of value which have established the principle of the right
to the full produce of labour. All such systems have been wrecked on this. Their
authors have had to confess finally that what they wanted was nothing else than
the abolition of the income of individuals not based on labour, and that only socialization
of the means of production could achieve this. Of the right to the full produce
of labour, which had occupied minds for decades, nothing remains but the slogan—effective
for propaganda, of course—demanding that "unearned" non-labour income should be
The Right to Existence can be defined in various ways. If one understands by this
the claim of people, without means and unfit for work and with no relation to provide
for them, to subsistence, then the Right to Existence is a harmless institution
which was realized in most communities centuries ago. Certainly the manner in which
the principle has been carried into practice may leave something to be desired,
as for reasons that arise from its origin in charitable care of the poor, it gives
to the necessitous no title recoverable by law. By "Right to Existence," however,
the socialists do not mean this. Their definition is: "that each member of society
may claim that the goods and services necessary to the maintenance of his existence
shall be assigned to him, according to the measure of existing means, before the
less urgent needs of others are satisfied." The vagueness of the concept, "maintenance
of existence," and the impossibility of recognizing and comparing how urgent are
the needs of different persons from any objective standpoint, make this finally
a demand for the utmost possible equal distribution of consumption goods. The form
which the concept sometimes takes—that no one should starve while others have more
than enough—expresses that intention even more clearly. Plainly, this claim for
equality can be satisfied, on its negative side, only when all the means of production
have been socialized and the yield of production is distributed by the State. Whether
on its positive side it can be satisfied at all is another problem with which the
advocates of the Right to Existence have scarcely concerned themselves. They have
argued that Nature herself affords to all men a sufficient existence and only because
of unjust social institutions is the provisioning of a great part of humanity insufficient;
and that if the rich were deprived of all they are allowed to consume over and above
what is "necessary," everyone would be able to live decently. Only under the influence
of the criticism based on the Malthusian Law of Population has socialist doctrine
been amended. Socialists admit that under non-socialist production not enough is
produced to supply all in abundance, but argue that Socialism would so enormously
increase the productivity of labour that it would be possible to create an earthly
paradise for an unlimited number of persons. Even Marx, otherwise so discreet, says
that the socialist society would make the wants of each individual the standard
measure of distribution.
This much is certain, however: the recognition of the Right to Existence, in the
sense demanded by the socialist theorists, could be achieved only by the socialization
of the means of production. Anton Menger has, it is true, expressed the opinion
that private property and the Right to Existence might well exist side by side.
In this case claims of citizens of the State to what was necessary for existence
would have to be considered a mortgage on the national income, and these claims
would have to be met before favoured individuals received an unearned income. But
even he has to confess that were the Right to Existence admitted completely, it
would absorb such an important part of the unearned income and would strip so much
benefit from private ownership that all property would soon be collectively owned.
If Menger had seen that the Right to Existence necessarily involved a right to the
equal distribution of consumption goods, he would not have asserted that it was
fundamentally compatible with private ownership in the means of production.
The Right to Existence is very closely connected with the Right to Work. The
basis of the idea is not so much a Right to Work as a duty. The laws which allow
the unemployable a sort of claim to maintenance exclude the employable from a like
favour. He has only a claim to the allotment of work. Naturally the socialist writers
and with them the older socialist policy have a different view of this right. They
transform it, more or less clearly, into a claim to a task which is agreeable to
the inclinations and abilities of the worker, and which yields a wage sufficient
for his subsistence needs. Beneath the Right to Work lies the same idea, that engendered
the Right to Existence—the idea that in "natural" conditions—which we are to imagine
existing before and outside the social order based on private property but which
is to be restored by a socialist constitution when private property has been abolished—every
man would be able to procure a sufficient income through work. The bourgeois society
which has destroyed this satisfactory state of affairs owes to those thus injured
the equivalent of what they have lost. This equivalent is supposed to be represented
just by the Right to Work. Again we see the old illusion of the means of subsistence
which Nature is supposed to provide irrespective of the historical development of
society. But the fact is that Nature grants no rights at all, and just because she
dispenses only the scantiest means of subsistence and because wants are practically
unlimited, man is forced to take economic action. This action begets social collaboration;
its origin is due to the realization that it heightens productivity and improves
the standard of living. The notion, borrowed from the most naive theories of natural
law, that in society the individual is worse off than "in the freer primitive state
of Nature" and that society must first, so to speak, buy his toleration with special
rights, is the cornerstone of expositions upon the Right to Work as well as upon
the Right to Existence.
Where production is perfectly balanced there is no unemployment. Unemployment is
a consequence of economic change, and where production is unhindered by the interferences
of authorities and trade unions, it is always only a phenomenon of transition, which
the alteration of wage rates tends to remove. By means of appropriate institutions,
by the extension, for example, of labour exchanges, which would evolve out of the
economic mechanism in the unimpeded market—i.e. where the individual is free to
choose and to change his profession and the place where he works—the duration of
separate cases of unemployment could be so much shortened that it would no longer
be considered a serious evil. But the demand that every citizen should have a
right to work in his accustomed profession at a wage not inferior to the wage rates
of other labour more in demand is utterly unsound. The organization of production
cannot dispense with a means of forcing a change of profession. In the form demanded
by the socialist, the Right to Work is absolutely impracticable, and this is not
only the case in a society based on private ownership in the means of production.
For even the socialist community could not grant the worker the right to be active
only in his wonted profession; it, also, would need the power to move labour to
the places where it was most needed.
The three basic economic rights—whose number incidentally could easily be increased—belong
to a past epoch of social reform movements. Their importance today is merely, though
effectively, propagandistic. Socialization of the means of production has replaced
3 Collectivism and Socialism
The contrast between realism and nominalism which runs through the history of human
thought since Plato and Aristotle is revealed also in social philosophy.
difference between the attitude of Collectivism and Individualism to the problem
of social associations, is not different from the attitude of Universalism and Nominalism
to the problem of the concept of species. But in the sphere of social science this
contrast—to which in philosophy the attitude towards the idea of God has given a
significance which extends far beyond the limits of scientific research—has the
highest importance. The powers which are in existence and which do not want to succumb,
find in the philosophy of Collectivism weapons for the defence of their rights.
But even here Nominalism is a restless force seeking always to advance. Just as
in the sphere of philosophy it dissolves the old concepts of metaphysical speculation,
so here it breaks up the metaphysics of sociological Collectivism.
The political misuse of the contrast is clearly visible in the teleological form
which it assumes in Ethics and Politics. The problem here is stated otherwise than
in Pure Philosophy. The question is whether the individual or the community shall
be the purpose. This presupposes a contrast between the purposes of individuals
and those of the social whole, a contrast which only the sacrifice of the one in
favour of the other can overcome. A quarrel over the reality or nominality of the
concepts becomes a quarrel over the precedence of purposes. Here there arises a
new difficulty for Collectivism. As there are various social collectiva, whose purposes
seem to conflict just as much as those of the individuals contrast with those of
the collectiva, the conflict of their interests must be fought out. As a matter
of fact, practical Collectivism does not worry much about this. It feels itself
to be only the apologist of the ruling classes and serves, as it were, as scientific
policeman, on all fours with political police, for the protection of those who happen
to be in power.
But the individualist social philosophy of the epoch of enlightenment disposed of
the conflict between Individualism and Collectivism. It is called individualistic
because its first task was to clear the way for subsequent social philosophy by
breaking down the ideas of the ruling Collectivism. But it has not in any way replaced
the shattered idols of Collectivism with a cult of the individual. By making the
doctrine of the harmony of interests the starting point of sociological thought,
it founded modem social science and showed that the conflict of purposes upon which
the quarrel turned did not exist in reality. For society is only possible on these
terms, that the individual finds therein a strengthening of his own ego and his
The collectivist movement of the present day derives its strength not from an inner
want on the part of modern scientific thought but from the political will of an
epoch which yearns after Romanticism and Mysticism. Spiritual movements are revolts
of thought against inertia, of the few against the many; of those who because they
are strong in spirit are strongest alone against those who can express themselves
only in the mass and the mob, and who are significant only because they are numerous.
Collectivism is the opposite of all this, the weapon of those who wish to kill mind
and thought. Thus it begets the "New Idol," "the coldest of all cold monsters,"
the State. By exalting this mysterious being into a sort of idol, decking it
out in the extravagance of fantasy with every excellence and purifying it of all
dross, and by expressing a readiness to sacrifice everything on its altar, Collectivism
seeks consciously to cut every tie that unites sociological with scientific thought.
This is most clearly discernible in those thinkers who exerted the keenest criticism
to free scientific thought from all teleological elements, whilst in the field of
social cognition they not only retained traditional ideas and teleological ways
of thinking but even, by endeavouring to justify this, barred the way by which sociology
could have won for itself the liberty of thought already achieved by natural science.
No god and no ruler of Nature lives for Kant's theory of cognition of nature, but
history he regards "as the execution of a hidden plan of nature in order to bring
about a state-constitution perfect inwardly—and, for this purpose, outwardly as
well—as the only condition in which she can develop all her abilities in humanity."
In the words of Kant we can see with especial clearness the fact that modern Collectivism
has nothing more to do with the old realism of concepts but rather, having arisen
from political and not from philosophical needs, occupies a special position outside
science which cannot be shaken by attacks based on the theory of cognition. In the
second part of his Ideen zu einer Philosophie der Geschichte der Menschheit (Ideas
to a Philosophy of the History of Humanity) Herder violently attacked the critical
philosophy of Kant, which appeared to him as "Averroic" hypostasization of the general.
Anyone who sought to maintain that the race, and not the individual, was the subject
of education and civilization, would be speaking incomprehensibly, "as race and
species are only general concepts, except in so far as they exist in the individual
being." Even if one attributed to this general concept all the perfections of humanity—culture
and highest enlightenment—which an ideal concept permits, one would have "said just
as little about the true history of our race, as I would if, speaking of animality,
stoneness, metalness, in general, I were to ascribe to them the most glorious, but
in single individuals self-conflicting, attributes." In his reply to this Kant
completes the divorce of ethical-political Collectivism from the philosophical concept-realism.
"Whoever said that no single horse has horns but the species of horses is nevertheless
horned would be stating a downright absurdity. For then species means nothing more
than the characteristic in which all individuals must agree. But if the meaning
of the expression 'the human species' is—and this is generally the case—the whole
of a series of generations going into the infinite (indefinable), and it is assumed
that this series is continuously nearing the line of its destiny, which runs alongside
of it, then it is no contradiction to say, that in all its parts it is asymptotic
to it, yet on the whole meets it-in other words, that no link of all the generations
of the human race but only the species attains its destiny completely. Mathematicians
can elucidate this. The philosopher would say: the destiny of the human race as
a whole is continuous progress, and the completion of this is a mere idea—but in
all intention a useful idea—of the aim towards which we, according to the plan of
Providence, have to direct our exertions." Here the teleological character of
Collectivism is frankly admitted, and there opens up an unbridgeable chasm between
it and the way of thought of pure cognition. The cognition of the hidden intentions
of Nature lies beyond all experience and our own thought gives us nothing upon which
to form a conclusion as to whether it exists or what it contains. Such behaviour
of individual man and of social systems as we are able to observe provides no basis
for a hypothesis. No logical connection can be forged between experience and that
which we shall or may suppose. We are to believe—because it cannot be proved—that
against his will man does that which is ordained by Nature, who knows better; that
he does what profits the race, not the individual. This is not the customary
technique of science.
The fact is that Collectivism is not to be explained as a scientific necessity.
Only the needs of politics can account for it. Therefore it does not stop, as conceptual
realism stopped, at affirming the real existence of social associations—calling
them organisms and living beings in the proper sense of the words—but idealizes
them and makes them Gods. Gierke explains quite openly and unequivocally that one
must hold fast to the "idea of the real unity of the community," because this alone
makes possible the demand that the individual should stake strength and life for
Nation and State. Lessing has said that Collectivism is nothing less than "the
cloak of tyranny."
If the conflict between the common interests of the whole and the particular interests
of the individual really existed, men would be quite incapable of collaborating
in society. The natural intercourse between human beings would be the war of all
against all. There could be no peace or mutual sufferance, but only temporary truce,
which lasted no longer than the weariness of one or all the parts made necessary.
The individual would, at least potentially, be in constant revolt against each and
all, in the same way as he finds himself in unceasing war with beasts of prey and
bacilli. The collective view of history, which is thoroughly asocial, cannot therefore
conceive that social institutions could have arisen in any way except through the
intervention of a "world shaper" of the Platonic
(one who works for the people).
This operates in history through its instruments, the heroes, who lead resistant
man to where it wants him. Thus the will of the individual is broken. He who wants
to live for himself alone is forced by the representatives of God on earth to obey
the moral law, which demands that he shall sacrifice his well-being in the interests
of the Whole and its future development.
The science of society begins by disposing of this dualism. Perceiving that the
interests of separate individuals within society are compatible and that these individuals
and the community are not in conflict, it is able to understand social institutions
without calling gods and heroes to its aid. We can dispense with the Demiurge, which
forces the individual into the Collectivism against his will, as soon as we realize
that social union gives him more than it takes away. Even without assuming a "hidden
plan of nature" we can understand the development to a more closely-knit form of
society when we see that every step on this way benefits those who take it, and
not only their distant great-grandchildren.
Collectivism had nothing to oppose to the new social theory. Its continually reiterated
accusation, that this theory does not apprehend the importance of the collectiva,
especially those of State and Nation, only shows that it has not observed how the
influence of liberal sociology has changed the setting of the problem. Collectivism
no longer attempts to construct a complete theory of social life; the best it can
produce against its opponents is witty aphorism, nothing more. In economics as well
as in general sociology it has proved itself utterly barren. It is no accident that
the German mind, dominated by the social theories of classical philosophy from Kant
to Hegel, for a long time produced nothing important in economics, and that those
who have broken the spell, first Thünen and Gossen, then the Austrians Carl Menger,
Böhm-Bawerk, and Wieser, were free from any influence of the collectivist philosophy
of the State.
How little Collectivism was able to surmount the difficulties in the way of amplifying
its doctrine is best shown by the manner in which it has treated the problem of
social will. To refer again and again to the Will of the State, to the Will of the
People, and to the Convictions of the People is not in any way to explain how the
collective will of the social associations comes into being. As it is not merely
different from the will of separate individuals but, in decisive points, is quite
opposed to the latter, the collective will cannot originate as the sum or resultant
of individual wills. Every collectivist assumes a different source for the collective
will, according to his own political, religious and national convictions. Fundamentally
it is all the same whether one interprets it as the supernatural powers of a king
or priest or whether one views it as the quality of a chosen class or people. Friedrich
Wilhelm IV and Wilhelm II were quite convinced that God had invested them with special
authority, and this faith doubtless served to stimulate their conscientious efforts
and the development of their strength. Many contemporaries believed alike and were
ready to spend their last drop of blood in the service of the king sent to them
by God. But science is as little able to prove the truth of this belief as to prove
the truth of a religion. Collectivism is political, not scientific. What it teaches
are judgments of value.
Collectivism is generally in favour of the socialization of the means of production
because this lies nearer to its world philosophy. But there are collectivists who
advocate private ownership in the means of production because they believe that
the well-being of the social whole is better served by this system. On the other
hand, even without being influenced by collectivist ideas it is possible to believe
that private ownership in the means of production is less able than common ownership
to accomplish the purposes of humanity.
The term "Communism" signifies just the same as
"Socialism." The use of these two words has repeatedly changed during the past decades,
but always the question that separated socialists from communists was only political tactics.
Both aim to socialize the means of production.
Anton Menger, Das Recht auf den vollen Arbeitsertrag
in geschichtlicher Darstellung
, 4th ed. (Stuttgart and Berlin, 1910), p. 6.
Malthus, An Essay on the Principle of Population
5th ed. (London, 1817), vol. 3, pp. 154 ff.
Marx, Zur Kritik des sozialdemokratischen
Parteiprogramms von Gotha
, ed. Kreibich (Reichenberg, 1920), p. 17.
Anton Menger, op. cit., p. 10.
Ibid., pp. 10 ff. Also Singer-Sieghart, Das
Recht auf Arbeit in geschichtlicher Darstellung
(Jena, 1895), pp. 1 ff.; Mutasoff, Zur
Geschichte des Rechts auf Arbeit mit besonderer Rücksicht auf Charles Fourier
pp. 4 ff.
My works: Kritik des Interventionismus
(Jena, 1929), pp. 22 ff.; Die Ursachen der Wirtschaftskrise
(Tübingen, 1931), pp. 15 ff.
Pribram, Die Entstehung der individualistischen
(Leipzig, 1921), pp. 3 ff.
Thus Dietzel ("Individualismus,"
in Handwörterbuch der Staatswissenschaften
, 3rd ed., vol. 5, p. 590) formulates the contrast of
the individual principle and the social principle. Similarly Spengler, Preussentum und
(Munich, 1920), p. 14.
Nietzsche, "Also Sprach Zarathustra
Werke (Krönersche Klassikerausgabe, Vol VI), p. 59.
"L'Etat étant conçu comme un être idéal,
on le pare toutes les qualités que l'on rêve et on le dépouille de toutes les faiblesses que l'on hait."
("The state, being conceived as an ideal being, is endowed with all the qualities
of our dreams and stripped of all those qualities we hate") (P. Leroy-Beaulieu,
L'Etat moderne et ses fonctions
, 3rd ed. [Paris, 1900], p. 11); also, Bamberger, Deutschland
und der Sozialismus
[Leipzig, 1878], pp. 86 ff.
Kant, Idee zu einer allgemeinen Geschichte
in weltbürgerlicher Absicht
, vol. 1, Sämtliche Werke
(Leipzig, 1912), p. 235.
Herder, Ideen zu einer Philosophie der
Geschichte der Menschheit
, vol. 13, Sämtliche Werke, ed. Suphan (Berlin, 1887) pp. 345 ff.
Kant, Rezension zum zweiten Teil von Herders
Ideen zur Philosophie der Geschichte der Menschheit
, vol. 1, Werke, p. 267. On this,
see Cassirer, Freiheit und Form
(Berlin, 1916), pp. 504 ff.
Kant, Idee zu einer allgemeinen Geschichte
Gierke, Das Wesen der menschlichen Verbände
(Leipzig, 1902), pp. 34 ff.
In "Ernst und Falk," Gespräche für Freimaurer
vol. 5. Werke (Stuttgart, 1873), p. 80.
Huth, Soziale und individualistische Auffassung
im 18. Jahrhundert, vornehmlich bei Adam Smith und Adam Ferguson
(Leipzig, 1907), p. 6.
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