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PART II  THE ECONOMICS OF A SOCIALIST COMMUNITY
SECTION III Particular Forms of Socialism and Pseudo-Socialism


Chapter 16
Pseudo-Socialist Systems



1 Solidarism

In recent decades few have managed to remain uninfluenced by the success of the socialist criticism of the capitalist social order. Even those who did not want to capitulate to Socialism, have tried in many ways to act according to its criticism of private ownership in the means of production. Thus they have originated systems, ill-thought-out, eclectic in theory and weak in politics, which attempted to reconcile the contradictions. They were soon forgotten. Only one of these systems has spread—the system which calls itself Solidarism. This is at home above all in France; it has been called, not unjustly, the official social philosophy of the Third Republic. Outside of France, the term "Solidarism" is less well known, but the theories which make Solidarism are everywhere the social-political creed of all those religiously or conservatively inclined who have not joined Christian or State Socialism. Solidarism is distinguished neither by the depth of its theory, nor the number of its adherents. That which gives it a certain importance is its influence on many of the best and finest men and women of our times.

Solidarism starts by saying that the interests of all members of society harmonize. Private ownership in the means of production is a social institution the maintenance of which is to the interest of all, not merely of the owners; everyone would be harmed were it replaced by a common ownership endangering the productivity of social labour. So far, Solidarism goes hand in hand with Liberalism. Then, however, their ways separate. For solidarist theory believes that the principle of social solidarity is not realized simply by a social order based on private ownership in the means of production. It denies—without, however, arguing this more closely or bringing to light ideas not put forward before by the socialists, especially the non-Marxists—that merely acting for one's own property-interests within a legal order guaranteeing liberty and property ensures an interaction of the individual economic actions corresponding to the ends of social co-operation. Men in society, by the very nature of social co-operation, within which alone they can exist, are reciprocally interested in the well-being of their fellow men; their interests are "solidary," and they ought therefore to act with "solidarity." But mere private ownership in the means of production has not achieved solidarity in the society dividing labour. To do so, special provisions must be made. The more etatistically inclined wing of Solidarism wants to bring about "solidary" action by State action: laws shall impose obligations on the possessors in favour of the poorer people and in favour of the public welfare. The more ecclesiastically inclined wing of Solidarism wants to achieve the same thing by appeals to the conscience; not by State laws, but by moral prescriptions: Christian love will make the individual fulfil his social duties.

The representatives of Solidarism have laid down their social-philosophic views in brilliantly written essays, which reveal all the splendour of the French spirit. No one has been better able to paint in beautiful words the mutual dependence of men in society. At the head of them all is Sully Prudhomme. In his famous sonnet he shows the poet on awaking from a bad dream in which he has seen himself, as division of labour has ceased and no one will work for him, seul, abandonné, de tout le genre humain. (Alone, abandoned by all mankind.) This leads him to the knowledge:

...qu'au siècle où nous sommes
Nul ne peut se vanter de se passer des hommes;
Et depuis ce jour-là, je les ai tous aimés,

(... In our century
No one can claim to take the place of men;
And from that day I have loved everyone of them,)
They have also known well how to state their case firmly, either by theological[1] or juristic arguments.[2] But all this must not blind us to the inner weakness of the theory. Solidarist theory is a foggy eclecticism. It demands no special discussion. It interests us here much less than its social ideal, which claims "to avoid the faults of the individualist and socialist systems, to maintain that which is right in both."[3]

Solidarism proposes to leave the private ownership in the means of production. But it places above the owner an authority—indifferent whether Law and its creator, the State, or conscience and its counsellor, the Church—which is to see that the owner uses his property correctly. The authority shall prevent the individual from exploiting "unrestrainedly" his position in the economic process; certain restrictions are to be imposed on property. Thus State or Church, law or conscience, become the decisive factor in society. Property is put under their norms, it ceases to be the basic and ultimate element in the social order. It continues to exist only as far as Law or Ethics allow, that is to say, ownership is abolished, since the owner, in administering his property, must follow principles other than those imposed on him by his property interests. To say that, under all circumstances, the owner is bound to follow the prescription of Law and Ethics, and that no legal order recognizes ownership except within limits drawn by the norms, is by no means a reply. For if these norms aim only at free ownership and to prevent the owner from being disturbed in his right to keep his property as long as it does not pass to others on the basis of contracts he has made, then these norms contain merely recognition of private ownership in the means of production. Solidarism, however, does not regard these norms as alone sufficient to bring together fruitfully the labour of members of society. Solidarism wants to put other norms above them. These other norms thus become society's fundamental law. No longer private property but legal and moral prescription of a special kind, are society's fundamental law. Solidarism replaces ownership by a "Higher Law;" in other words, it abolishes it.

Of course, the solidarists do not really want to go as far. They want, they say, only to limit property, but to maintain it in principle. But when one has gone so far as to set up for property limits other than those resulting from its own nature, one has already abolished property. If the owner may do with his property only that which is prescribed to him, what directs the national economic activity is not property but that prescribing power.

Solidarism desires, for instance, to regulate competition; it shall not be allowed to lead to "the decay of the middle-class" or to the "oppression of the weak." [4] This merely means that a given condition of social production is to be preserved, even though it would vanish under private property. The owner is told what and how and how much he shall produce and at what conditions and to whom he shall sell. He thus ceases to be owner; he becomes a privileged member of a planned economy, an official drawing a special income.

Who shall decide in every single case, how far Law or Ethics go in limiting the owner's rights? Only the Law or Ethics itself.

Were Solidarism itself clear about the consequences of its postulates, it would certainly have to be called a variety of Socialism. But it is far from clear. It believes itself fundamentally different from State Socialism,[5] and the majority of its supporters would be horrified, were they to recognize what their ideal really was. Therefore its social ideal may still be counted one of the pseudo-socialist systems. But it must be realized that what separates it from Socialism is one single step. Only the mental atmosphere of France, generally more favourable to Liberalism and Capitalism, has prevented the French Solidarists and the Jesuit Pesch, an economist under French influence, from overstepping decisively the boundary between Solidarism and Socialism. Many, however, who still call themselves solidarists, must be counted complete etatists. Charles Gide, for example, is one of these.

2 Various Proposals for Expropriation

Precapitalist movements for the reform of property generally culminate in the demand for equality in wealth. All shall be equally rich; no one shall possess more or less than the others. This equality is to be achieved by redividing the land and to be made lasting by prohibiting sale or mortgage of land. Clearly, this is not Socialism, though it is sometimes called Agrarian Socialism.

Socialism does not want to divide the means of production at all, and wants to do more than merely expropriate; it wants to produce on the basis of common ownership of the means of production. All such proposals, therefore, which aim only to expropriate the means of production are not to be regarded as Socialism; at best, they can be only proposals for a way to Socialism.

If, for example, they proposed a maximum amount to which one and the same person may own private property, they could be regarded as Socialism only if they intend to make the wealth thus accruing to the State the basis of socialist production. We should then have before us a proposal for socialization. It is not difficult to see that this proposal is not expedient. Whether the amount of the means of production which could thus be socialized is a greater or smaller one will depend on the extent to which private fortunes are still permitted. If this is fixed low, the proposed system is little different from immediate socialization. If it is fixed high, the action against private property will not do much to socialize the means of production. But anyway a whole series of unintended consequences must occur. For just the most energetic and active entrepreneurs will be prematurely excluded from economic activity, whilst those rich men whose fortunes approach the limit will be tempted to extravagant ways of living. The limitation of individual fortunes may be expected to slow down the formation of capital.

Similar considerations apply to proposals, which one hears in various quarters, to abolish the right of inheritance. To abolish inheritance and the right to make donations intended to circumvent the prohibition, would not bring about complete Socialism, though it would, in a generation, transfer to society a considerable part of all means of production. But it would, above all, slow down the formation of new capital, and a part of the existing capital would be consumed.

3 Profit-Sharing

One school of well-meaning writers and entrepreneurs recommends profit-sharing with wage earners. Profits shall no longer accrue exclusively to the entrepreneur; they shall be divided between the entrepreneurs and the workers. A share in the profits of the undertakings shall supplement the wages of the workers. Engel expects from this no less than "a settlement, satisfying both parties, of the raging fight, and thus, too, a solution of the social question."[6] Most protagonists of the profit-sharing system attach no less importance to it.

The proposals to transfer to the worker a part of the entrepreneur's profits proceed from the idea that, under Capitalism, the entrepreneur deprives the worker of a part of that which he could really claim. The basis for the idea is the obscure concept of an inalienable right to the "full" product of labour, the exploitation theory in its popular, most naive, form, here expressed more or less openly. To its advocates the social question appears as a fight for the entrepreneur's profit. The socialists want to give this to the workers; the entrepreneurs claim it for themselves. Somebody comes along and recommends that the fight be ended by a compromise: each party shall have part of his claim. Both will thus fare well: The entrepreneurs, because their claim is obviously unjust, the workers because they get, without fighting, a considerable increase of income. This train of thought, which treats the problem of the social organization of labour as a problem of rights, and tries to settle a historical dispute as if it were a quarrel between two tradesmen, by splitting the difference, is so wrong that there is no purpose in going into it more closely. Either private ownership in the means of production is a necessary institution of human society or it is not. If it is not, one can or must abolish it, and there is no reason to stop half-way out of regard for the entrepreneur's personal interests. If, however, private property is necessary, it needs no other justification for existing, and there is no reason why, by partially abolishing it, its social effectiveness should be weakened.

The friends of profit-sharing think it would spur the worker on to a more zealous fulfillment of his duties than can be expected from a worker not interested in the yield of the undertaking. Here too, they err. Where the efficiency of labour has not been diminished by all kinds of socialist destructionist sabotage, where the worker can be dismissed without difficulty and his wages adjusted to his achievements without regard to collective agreements, no other spur is necessary to make him industrious. There, in such conditions, the worker works fully conscious of the fact that his wages depend on what he does. But where these factors are lacking, the prospect of getting a fraction of the net profit of the undertaking would not induce him to do more than just as much as is formally necessary. Though of a different order of magnitude, it is the same problem we have already considered in examining the inducements in a socialist community to overcome the disutility of labour. Of the product of the extra labour, the burden of which the worker alone has to carry, he receives a fraction not sufficiently large to reward the extra effort.

If the workers' profit-sharing is carried out individually, so that each worker participates in the profits of just that undertaking he happens to be working for, there are created without any evident reason, differences in income, which fulfil no economic function, appear to be utterly unjustified, and which all must feel unjust. "It is inadmissible that the turner in one works should earn twenty marks and receive ten marks more as a share of profits, while a turner in a competing works, where business is worse, perhaps worse directed, gets only twenty marks." This means either that a "rent" is created and perhaps that jobs connected with this "rent" are sold or that the worker tells his entrepreneur: "I don't care from what fund you pay the thirty marks; if my colleague receives it from the competition I demand it too."[7] Individual profit-sharing must lead straight to Syndicalism, even if it is a Syndicalism where the entrepreneur still keeps part of the entrepreneur's profit.

However, another way could be tried. Not the individual workers participate in the profits, but all the citizens; a part of the profits of all undertakings is distributed to all without distinction. This is already realized in taxation. Long before the war, joint stock companies in Austria had to surrender to the State and to other tax-levying authorities from twenty to forty per cent of their net profits; in the first years of the peace this grew from sixty to ninety per cent and more. The "mixed" public enterprise is the attempt to find a form for the community's participation, which makes the community share the management of the concern, in return for which it has to share in the providing of capital. Here, too, there is no reason why one should be content with half abolishing private property, if society could abolish the institution completely without injuring the productivity of labour. If, however, to abolish private property is disadvantageous, then the half abolition is disadvantageous too. The half-measure may, in fact, be hardly less destructive than the clean sweep. Advocates usually say that the "mixed" undertaking leaves scope for the entrepreneur. However, as we have already shown, state or municipal activity hampers the freedom of the entrepreneur's decisions. An undertaking forced to collaborate with civil servants is not able to utilize the means of production in such ways as profit making demands.[8]

4 Syndicalism

As political tactics Syndicalism presents a particular method of attack by organized labour for the attainment of their political ends. This end may also be the establishment of the true Socialism, that is to say, the socialization of the means of production. But the term Syndicalism is also used in a second sense, in which it means a socio-political aim of a special kind. In that sense Syndicalism is to be understood as a movement whose object is to bring about a state of society in which the workers are the owners of the means of production. We are concerned here with Syndicalism only as an aim; with Syndicalism as a movement, as political tactics, we need not deal.

Syndicalism as an aim and Syndicalism as political tactics do not always go hand in hand. Many groups which have adopted the syndicalist "direct action" as the basis of their proceedings are striving for a genuinely socialist community. On the other hand the attempt to realize Syndicalism as an end can be carried on by methods other than those of violence recommended by Sorel.

In the minds of the great bulk of workers who call themselves socialists or communists, Syndicalism presents itself, at least as vividly as Socialism, as the aim of the great revolution. The "petty bourgeois" ideas which Marx thought to overcome are very widespread—even in the ranks of the Marxian socialists. The great mass desire not the genuine Socialism, that is, centralized Socialism but Syndicalism. The worker wishes to be the lord of the means of production which are employed in his particular undertaking. The social movement round about us shows more clearly every day that this and nothing else is what the worker desires. In contradistinction to Socialism which is the result of armchair study, syndicalist ideas spring direct from the mind of the ordinary man, who is always hostile to "unearned" income obtained by someone else. Syndicalism like Socialism aims at the abolition of the separation of worker from the means of production, only it proceeds by another method. Not all the workers will become the owners of all the means of production; those in a particular industry or undertaking or the workers engaged in a complete branch of production will obtain the means of production employed in it. The railways to the railway men, the mines to the miners, the factories to the factory hand—this is the slogan.

We must ignore every freak scheme for enacting Syndicalist ideas and take a thoroughly consistent application of the main principle to the whole economic order as the starting point of our examination. This is not difficult. Every measure which takes the ownership of all the means of production from the entrepreneurs, capitalists, and landlords without transferring it to the whole of the citizens of the economic area, is to be regarded as Syndicalism. It makes no difference in this case, whether in such a society more or less of these associations are formed. It is unimportant whether all branches of production are constituted as separate bodies or only single undertakings, just as they happen to have evolved historically, or single factories of even single workshops. In essence the scheme is hardly affected if the lines drawn through the society are more or less, horizontal or vertical. The only decisive point is that the citizen of such a community is the owner of a share of certain means of production and the non-owner of other means of production, and that in some cases, for example, when he is unable to work, he may own no property at all. The question whether the workers' incomes will, or will not, be noticeably increased, is unimportant here. Most workers have absolutely fantastic ideas about the increase of wealth they could expect under syndicalist arrangements of property. They believe that just the mere distribution of the share which landlords, capitalists and entrepreneurs draw under capitalist industry must considerably increase the income of each of them. Apart from this they expect an important increase in the product of industry, because they, who regard themselves as particularly expert, will themselves conduct the enterprise, and because every worker will be personally interested in the prosperity of the undertaking. The worker will no longer work for a stranger but for himself. The liberal thinks quite differently about all this. He points out that the distribution of rent and profit incomes among the workers would bring them an insignificant increase in incomes. Above all he maintains that enterprises which are no longer directed by the self-interest of entrepreneurs working on their own account but by labour leaders unfitted for the task will yield less, so that the workers will not only earn no more than under a free economy, but considerably less.

If syndicalist reform merely handed over to the workers the ownership of the means of production and left the system of property of the capitalist order otherwise unchanged, the result would be no more than a primitive redistribution of wealth. The redistribution of goods with the object of restoring the equality of property and wealth is at the back of the mind of the ordinary man whenever he thinks of reforming social conditions, and it forms the basis for all popular proposals for socialization. This is not incomprehensible in the case of land workers, to whom the object of all ambition is to acquire a homestead and a piece of land large enough to support him and his family; in the village, redistribution, the popular solution of the social problem, is quite conceivable. In industry, in mining, in communications, in trade and in banking where a physical redistribution of the means of production is quite inconceivable, we get instead a desire for the division of the property rights while preserving the unity of the industry or enterprise. To divide in this simple way would be, at best, a method of abolishing for the moment the inequality in the distribution of income and poverty. But after a short time, some would have squandered their shares, and others would have enriched themselves by acquiring the shares of the less economically efficient. Consequently there would have to be constant redistributions, which would simply serve to reward frivolity and waste—in short every form of uneconomic behaviour. There will be no stimulus to economy if the industrious and thrifty are constantly compelled to hand over the fruits of their industry and thrift to the lazy and extravagant.

Yet even this result—the temporary achievement of equality of income and property—could not be accomplished by syndicalization. For syndicalization is by no means the same for all workers. The value of the means of production in different branches of production is not proportional to the number of workers employed. It is unnecessary to elaborate the fact that there are products which involve more of the productive factor, labour, and less of the productive factor, Nature. Even a division of the means of production at the historical commencement of all human production would have led to inequality; much more so if these means are syndicalized at a highly progressive stage of capital accumulation in which not only natural factors of production but produced means of production are divided. The values of the share falling to individual workers in a redistribution of this kind would be very different: some would obtain more, others less, and as a result some would draw a larger income from property—unearned income—than others. Syndicalization is in no way a means of achieving equality of incomes. It abolishes the existing inequality of incomes and property and replaces it by another. It may be that this syndicalistic inequality is regarded as more just than that of the capitalistic order—but on this point science can give no judgment.

If syndicalist reform is to mean more than the mere redistribution of productive goods, then it cannot allow the property arrangements of Capitalism to persist in regard to the means of production. It must withdraw productive goods from the market. Individual citizens must not dispose of the shares in the means of production which are allotted to them; for under Syndicalism these are bound up with the person of the owner in a much closer way than is the case in the liberal society. How, in different circumstances, they may be separated from the person can be regulated in various ways.

The naive logic of the advocates of Syndicalism assumes without any further ado a completely stationary condition of society, and pays no attention to the problem, how the system will adapt itself to changes of economic conditions. If we assume that no changes occur in the methods of production, in the relations of supply and demand, in technique, or in population, then everything seems to be quite in order. Each worker has only one child, and departs out of this world at the moment his successor and sole heir becomes capable of work; the son promptly steps into his place. We can perhaps assume that a change of occupation, a transfer from one branch of production to another or from one independent undertaking to another by a voluntary simultaneous exchange of positions and of shares in the means of production will be permitted. But for the rest the syndicalist state of society necessarily assumes a strictly imposed caste system and the complete end of all changes in industry and, therefore, in life. The mere death of a childless citizen disturbs it and opens up problems which are quite insoluble within the logic of the system.

In the syndicalist society the income of a citizen is made up of the yield from his portion of property and of the wages from his labour. If the shares in the property in the means of production can be freely inherited, then in a very short time differences in property holding will arise even if no changes occur among the living. Even if at the beginning of the syndicalist era the separation of the worker from the means of production is overcome, so that every citizen is an enterpreneur as well as a worker in his undertaking, it may so happen that later on citizens who do not belong to a particular undertaking inherit shares in it. This would very quickly drive the syndicalist society to a separation of labour and property, without the advantages of the capitalist order of society.[9]

Every economic change immediately creates problems on which Syndicalism would inevitably be wrecked. If changes in the direction and extent of demand or in the technique of production cause changes in the organization of the industry, which require the transfer of workers from one concern to another or from one branch of production to another, the question immediately arises what is to be done with the shares of these workers in the means of production. Should the workers and their heirs keep the shares in those industries to which they happened to belong at the actual time of syndicalization and enter the new industries as simple workers earning wages, without being allowed to draw any part of the property income? Or should they lose their share on leaving an industry and in return receive a share per head equal to that possessed by the workers already occupied in the new industry? Either solution would quickly violate the principle of Syndicalism. If, in addition, men were permitted to dispose of their shares, conditions would gradually return to the state prevailing before the reform. But if the worker on his departure from an industry loses his share and on entering another industry acquires a share in that, those workers who stood to lose by the change would, naturally, oppose energetically every change in production. The introduction of a process making for greater productivity of labour would be resisted if it displaced workers or might displace them. On the other hand the workers in an undertaking or branch of industry would oppose any development by the introduction of new workers if it threatened to reduce their income from property. In short, Syndicalism would make every change in production practically impossible. Where it existed there could be no question of economic progress.

As an aim Syndicalism is so absurd, that speaking generally, it has not found any advocates who dared to write openly and clearly in its favour. Those who have dealt with it under the name of co-partnership have never thought out its problems. Syndicalism has never been anything else than the ideal of plundering hordes.

5 Partial Socialism

Natural ownership of the means of production is divisible. In capitalist society, it generally is divided.[10] But the power to dispose which belongs to him who directs production and which alone we call ownership, is indivisible and illimitable. It may belong to several people jointly, but cannot be divided in the sense that the power of disposing itself can be decomposed into separate rights of command. The power to dispose of the use of a commodity in production can only be unitary; that this could in any way be dissolved into elements is unthinkable. Ownership in the natural sense cannot be limited; wherever one speaks of limitation, one means either a curtailment of a too-widely drawn juristic definition or recognition of the fact that ownership in the natural sense belongs concretely to someone other than the person whom the law recognizes as owner.

All attempts to abolish by a compromise the contrast between common property and private ownership in the means of production are therefore mistaken. Ownership is always where the power to dispose resides.[11] Therefore State Socialism and planned economies, which want to maintain private property in name and in law, but in fact, because they subordinate the power of disposing to State orders, want to socialize property, are socialist systems in the full sense. Private property exists only where the individual can deal with his private ownership in the means of production in the way he considers most advantageous. That in doing so he serves other members of society, because in the society based on division of labour everyone is the servant of all and all the masters of each, in no way alters the fact that he himself looks for the way in which he can best perform this service.

It is not possible to compromise, either, by putting part of the means of production at the disposal of society and leaving the remainder to individuals. Such systems simply stand unconnected, side by side, and operate fully only within the space they occupy. Such mixtures of the social principles of organization must be considered senseless by everyone. No one can believe that the principle which he holds to be right should not be carried through to the end. Nor can anyone assert that one or the other of the systems proves the better only for certain groups of the means of production. Where people seem to be asserting this, they are really asserting that we must demand the one system at least for a group of the means of production or that it should be given at most for a group. Compromise is always only a momentary lull in the fight between the two principles, not the result of a logical thinking-out of the problem. Regarded from the stand-point of each side, half-measures are a temporary halt on the way to complete success.

The best known and most respected of the systems of compromise believes indeed that it can recommend half-measures as a permanent institution. The land-reformers want to socialize the natural factors of production, but for the rest to leave private ownership in the means of production. They hereby proceed from the assumption, regarded as self-evident, that common property in the means of production gives a higher yield than private property. Because they regard land as the most important means of production, they wish to transfer it to society. With the breakdown of the thesis that public ownership could achieve better results than private ownership, the idea of land reform also falls to the ground. Whoever regards land as the most important means of production must certainly advocate the private ownership of land, if he considers private ownership the superior economic form.



[1]Here one must name before all the Jesuit Pesch, Lehrbuch der Nationalökonomie, Vol. I, 2nd ed. (Freiburg, 1914), pp. 392-438. In France there is a conflict between catholic and freethinking solidarists—about the relation of the Church to the State and to society, rather than about the real principles of social theory and policy—which makes Church circles suspicious of the term "solidarism." See Haussonville, "Assistance publique et bienfaisance privée" (Revue des Deux Mondes, Vol. CLXII, 1900, pp. 773-808); Bouglé, Le Solidarisme (Paris, 2907), pp. 8 ff.

[2]Bourgeois, Solidarité, 6th ed. (Paris, 1907), pp. 115 ff.; Waha, Die Nationalökonomie in Frankreich (Stuttgart, 1910), pp. 432 ff.

[3]Pesch, op. cit., Vol. I, p. 420.

[4]Ibid., p. 422.

[5]Ibid., p. 420.

[6]Engel, "Der Arbeitsvertrag und die Arbeitsgesellschaft" (in Arbeiterfreund, 5 Year, 1867, pp. 129-154). A survey of the German literature on profit sharing is given in the memorandum of the German "Statistisches Reichsamt": Untersuchungen and Vorschläge zur Beteiligung der Arbeiter an dem Erträge wirtschaftlicher Unternehmungen, published as a supplement to the Reichs-Arbeitsblatt of March 3, 1920.

[7]See the arguments of Vogelstein at the Regensburg session of the Verein für Sozialpolitik (Schriften des Vereins für Sozialpolitik, Vol. CLIX, pp. 132 ff.).

[8]See p.256.

[9]It is misleading, therefore, to call Syndicalism "workers' Capitalism," as I too have done in Nation, Staat und Wirtschaft, p. 164.

[10]See pp. 40 ff.

[11]On interventionism see my Kritik des Interventionismus, pp. 1 ff.


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